ES (E-mini SP 500) What more do I need?

NG_NM

I trade the E-miniS&P 500 exclusively. I find advantages in specializing in one market.For those who are not yet trading futures because they don't understand them, Ihope this introduction will provide you with enough information and confidenceto look seriously at trading the E-mini. Below I will give you basicinformation on the E-mini for the S&P 500 and the advantages I see tradingthis market.

BACKGROUND: The Chicago Mercantile Exchange (CME) introduced theS&P 500 futures contract in the Spring of 1982. The commodity ticker symbolfor the "big" contract is SP. The drawback to SP was that it wasexpensive and out of the financial reach of most individual traders. It becamethe domain of institutions and large market players with deep pockets. In orderto open up index futures trading to the individual traders, the CME created smaller sized futurecontracts called the E-mini in 1997. The current value of the E-minicontract is 1/5 the size of the big contract. The E-mini quickly becamethe fastest growing product in CME history, and the most popular equity indexfutures contract in the world. There are good reasons for this.

Whereas the bigcontract (SP) is traded by the old-fashioned open-outcry method on the tradingfloor, the new E-mini (ES) is traded electronically through CME's Globexsystem. When the E-mini S&P 500 was introduced, the big contract(SP) was valued at $500 times the index. Subsequently, the big contract wassplit 2:1 and a contract is now valued at $250 times the S&P index. TheE-mini is valued at $50 times the S&P index.

What is a Future'sContract: It is an agreement between a seller and a buyer to deliver andtake delivery of a commodity at a specified future date. But in thecase of the E-mini S&P 500 futures contract, the commodity is a portfolioof stocks (500) represented by a stock price index (the S&P 500). Inpractice, the delivery is a cash settlement of the difference betweenthe original transaction price and the final price of the index at the terminationof the contract. Rather than waiting for the end of the contract, however, thecash settlement occurs incrementally daily until the termination of thecontract. The futures contract price corresponds to the underlying index,although it is not exactly the same. It can be higher or lower, but tracksclosely enough to serve as a reasonable proxy.

The Value of the E-miniS&P Futures Contract: This can be calculated by multiplying ES'closing value by $50. As I write this, ES closed at 1091.50. Therefore, one ES contract is worth 1091.50 X $50or $54,575.

The important numbers for trading are:

1. How many ticks(minimum price fluctuation) are there in 1 point on the index? and

2. What is the value ofa full point or a tick? For the big contract (SP), there are 10 ticksin a point, and each tick is worth $25, making a full point worth $250. For ES,there are 4 ticks in a point, and each tick is worth $12.50, making a fullpoint worth $50.

With my broker, a roundtrip trade with 1 contract costs about $3. So if I make one tick profit on atrade ($12.50), I cover the cost of the trade and make profit. If I make 5points on a trade with 1 contract, my profit is 5 X $50 = $250 minuscommission. Five contracts would have yielded a nice $1,250 profit! What are themargin requirements to trade ES?

MarginRequirements: This is what makes trading the E-mini's so appealing. Themargin requirements vary from broker to broker, so I will give you my broker'smargin requirements.

Initial intradaymargin: amount in your futures trading account needed to open a tradeduring the regular session ~ Margin Requirement per contract = $1,406

Intraday maintenance margin: amount needed in trading account to maintaineach contract ~ Margin Requirement per contract = $1,125

Initial OvernightMargin: amount needed to carry each contract through the 16:15 closing ofthe day session ~ Margin Requirement percontract = $5,625

Overnight Maintenance Margin: amount needed to maintain eachcontract that was held through the 16:15 close of the day session ~ MarginRequirement per contract = $4,500

As an example, if youhave a $7,500 futures trading account, you can:

Tradea maximum of 5 contractsduring the day. ($7,500/$1,406 = 5.33)

Avoid a margin call during the day (maintenance requirement) if youraccount doesn't fall below $5,625 (a coincidence that it is the same as theinitial overnight margin requirement), and you are trading the maximum 5contracts. ($1,125 x 5 = $5,625) This is not calculated at the close of thetrade, but while the trade is active, and is based on the changing price.

Carry 1 contractthrough the 16:15 close of the daysession. You would need $11,250 to carry 2 contracts through as an initialovernight trade. ($5,625 x 2 = $11,250)

Avoid a margin call on a 1 contract overnight trade if your account doesn't fall below$4,500.

A couple observationscan be made from the facts just stated. First, you have tremendous leveragetrading ES. Secondly, you are severely penalized if you carry a trade throughthe 16:15 regular session closing. This is basic information for those whotrade ES already, but for those who are still considering it, I hope this isuseful. I wish someone had made all this clear to me when I began trading theE-mini. A fear of the unknown kept me away from it.

Advantages: Why do I trade an E-mini?

Minimal cashrequirement to open a futures trading account.

Highly leveragedtrading vehicle (money can be made and lost fast!). The margin requirement arelow. Today-trade stocks, a minimum $25,000 trading account is required.

You can participate inbroad market moves, with one trading decision (one chart to analyze) - insteadof having to select individual stocks (analyzing many charts).

No market research is necessary.

You are on a levelplaying field when placing trades because of an around-the-clock electronictrading platform (Globex) that the E-mini is traded on. The full-size contract,SP, still uses the open outcry pit trading method, with inherent delays. Forthis reason, even large institutions and hedge funds trade the E-mini.

Generally low commissions.

High liquidity andtherefore minimal slippage and tight bid/ask spread (1 tick)

No up-tick rule for shorting,

Beautiful charts toanalyze. Even 1 minute charts reveal Elliott Wave patterns.

Exclusively TradingES: Aside from my IRA, all my trading is done with ES.

Why do I specialize?

For me, there areadvantages to specializing. There is the old saying that a generalist learnsless and less about more and more, until he or she knows nothing about everything;

and the specialistlearns more and more about less and less, until he or she knows everythingabout nothing. Well, in this instance I think I get closer to learning more andmore about something.

I believe that marketshave personalities. By getting to know one market intimately, you can feelwhen you are in synch with the market and when you're not. That's an edge.

I like the way ESmoves, and the charts it makes.

By trading ESexclusively, I feel like I am part of an unfolding story that I am followingclosely. When I jump from stock to stock or index to index, I have to reanalyzecharts and I feel I may be missing some subtleties when I'm jumping around.

IMO, ES is the idealtrading vehicle. What more do I need?

恒一

rightonmoney

鲲鹏展翅

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Rosie22

ContxTrd

Hutong9999

Your wrote the article yourself?

NG_NM

Hutong9999 发表于 2016-9-1 05:54 PM
Your wrote the article yourself?

转载的

georgeyn

NG_NM

georgeyn 发表于 2016-9-1 08:28 PM

胡同有能人，不喧哗，不炫耀。悄声传经送宝。

值得我们花时间 学习 模仿。例如NT与HY。