Whether you’re new to the markets or a seasoned trader, you should be trading S&P 500 E-Mini Future.
Large Institutions and Hedge Funds trade S&P 500 Futures contracts. This way they leverage their money, not having to invest in any one company but actually able to trade all 500 at once. The S&P 500 E-mini Future is a smaller version of the exact same futures contracts traded by these large institutions. It is designed primarily for individual traders to trade. But it follows along exactly with the larger S&P 500 the institutions trade. That way, when the large S&P 500 contract goes up, the E-Mini S&P 500 goes up along with it.
The E-mini S&P 500 Future offers great potential for traders. The margins for trading the E-mini S&P 500 Future contract can be as low as $400-$500 per contract, depending on the brokerage firm you use. But low margins are not the only reason traders are turning away from trading the Stock Market. So if you are tired of being in stocks „for the long haul“, if you are tired of seeing your mutual fund portfolio value cut in half by the sub-prime credit crunch, find out why you should be trading S&P 500 E-mini Futures.
One of the best things about trading the S&P 500 E-mini Future is leverage. The S&P 500 E-mini Future is based upon the S&P 500 index, or the value of the top 500 stocks traded publically. Wouldn’t it be great to be able to trade 500 stocks all at once, not having to research any one in particular? Unfortunately you cannot trade an index. So the Chicago Mercantile Exchange created a futures contract based upon this index. Instead of having to buy shares in 500 companies that would cost a fortune, you can pay $500 per contract. This way it is as if you are trading all 500 stocks at once. Now that is leverage. Leverage is probably the main attraction of professional traders to the futures market.
Another reason professional traders are attracted to trading the S&P 500 E-Mini Future is the ability to daytrade. For $500 per contract, you can daytrade. What could you buy for $500 if you were trading stocks? And many futures brokers will allow you to open an account with $2500. Daytrading stocks makes you a „pattern day trader.“ The regulations required that you have a margin account of at least $25,000 in order to daytrade stocks.
Not convinced yet? Look, here’s another good reason to daytrade the S&P 500 E-mini Future…no research.
You don’t need to do hours and hours and hours of research just to find the stock to trade. No more investing hundreds of dollars monthly in a Real Time stock screener. And most important, no need to have 5 or 6 charts open at the same time. You can use just one chart. This means you can concentrate on your technical set-ups on just one instrument. You won’t need to open one chart, then minimize it, and then open another chart, etc. Trading just one instrument can often mean that you minimize risk because your attention is narrowed to just what you are trading.
As we know, each instrument trades differently, requiring its own profit targets and stop losses. Trading the S&P 500 E-mini future, you’ll be able to identify profit targets and stop losses easier because you only need to set them for 1 instrument.
Much of trading is watching highs and lows, hard to do if you are watching a portfolio of 5 or 10 stocks. But if you only need to remember one closing price, one high or one low, might that not be easier to trade?
Whether you are a fundamental analyst or a technical analyst, the S&P 500 E-mini Future will work for you. With the institutional traders trading the larger S&P 500, you get the benefit of their research without the cost because you are trading the same basic instrument they are trading. Are you concerned with overbought or oversold conditions, news announcements, Federal Reserve interest rate cuts? The S&P 500 E-mini is a perfect tool for taking advantage of those specific movements. Why? Because the S&P 500 E-mini trades 24 hours a day.
Or are you a master chart technician? If so, the S&P 500 E-mini Future is for you. It works well with moving averages, macd’s, stochastics, pivots, and many other technical tools. If you prefer to look at the markets through a fundamental or sentiment-based approach, then rest assured that the same techniques for determining oversold markets or markets where emotions have run to extremes, will apply to e-mini index futures trading.
Like any other trading, whether it is stocks or bonds or options, or currencies, trading the S&P 500 E-mini Future offers great potential for gain and loss. Before you start trading the Futures market, it is advisable that you learn to trade it. Take an online course, do a seminar, read a book. You might take a look at Shadowtraders.com. They offer both an online study course as well as a seminar.
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Source by Barbara Cohen