Advantages of Trading the E-Mini Futures

S&P 500 E-mini futures i.e. Electronic Mini S&P 500 futures refers to the electronically traded futures contracts. This was first launched by the Chicago Mercantile Exchange on September 9th, 1997. E-mini futures or just E-mini as they are often named, are smaller sized contracts. The main purpose of launching E-mini futures is to attract investors to trading the stock market index futures. E-mini refers not only to the index but also the 500 companies that have their common stocks included in the index itself.

E-mini is one fifth of the size of the standard SP 500 futures contract. The E-mini futures contract has the point value of $50 which is much lower compared to that of normal S&P futures contract value of $250. With the E-mini, investors can trade a fraction of the overall index at a much lower price.

The E-mini offers great potential for traders. Greater liquidity and affordability for individual investors are the prime advantages of these futures. Since E-mini S&P 500 contracts are traded electronically, investors can trade round the clock. This is a great attraction and advantage for traders. They can trade all day long, 5 days of the week. You can even trade them from the comfort of your home.

Since the margin required is smaller in the E-mini futures, it is affordable for a lot of new investors. Margin requirements are lower than those of the full size contract. The attraction to E-mini is that you can begin trading with as little as $2000 (depending on the margin requirements of your broker).

High liquidity is another attractive feature; there are always buyers and sellers. Slippage and tight bid or offer spreads have been minimized owing to its high liquidity. Another great feature of the E-mini futures is that you can buy long and sell short and there is no uptick regulation in these trades

E-mini futures carry very low brokerage commissions. Brokerage commission is one of the main problems for new traders with little amount of capital. Because of the low transaction costs in the E-mini futures, one can trade more often.

US traders can benefit from lower tax rates on gains and income as the e-mini qualifies as "1256 contracts". This could be advantageous for many investors. This minimum tax reporting requirements helps to trade more private with reduced government interference. This will also encourage a lot of traders and investors to trade in the E-mini futures.

The E-mini offers a smaller contract that suits well for a broad range of traders. Since, these futures are traded electronically; it offers speed, reliability and flexibility. You can almost trade from anywhere at any time. It offers open, fair and transparent markets. E-mini markets have high volume and leverage. Thus, it is an ideal trading environment for day trading and short-term trading. It provides ability to have control over purchases and sales, giving reassurance in the money invested.

Because of the above said benefits, the E-mini gains a lot of success and popularity not only with amateur traders but also with the professional traders.

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