Why should't i trade the emini's?

Discussion in 'Index Futures' started by ehlaban, Jul 29, 2001.

  1. ehlaban


    Hello all,

    I'm seriously thinking about trading the Emini's.
    Right now i'm daytrading the "fast" Nasdaq stocks
    like BRCM, JNPR (to low at the moment), QCOM etc with
    The more i read about Emini's the more i think
    fast, liquid, no downtick, focus on 1 or 2 (ES/NQ),
    fast fills etc.

    Risk? if i buy 200 share of a $50 stock (10.000)
    and it moves 1 point i gain or lose $200.
    If i buy 5 NQ contracts (5*1675= 8375) and there's a 1 point move 5*1*20= $100 (or is it $20 per tick 0.5 points?)

    So whats the catch? More points movement? greater volatility? Not so "predictable? There must be something i don't know yet or understand?
    Please give your reactions.

  2. tntneo

    tntneo Moderator

    since nobody is reacting, well, I only want to say 'why not?'.

    As long as you control your risk.. be careful and realize that one point comes very quickly with the e mini, so even though your risk is lower [in your example] it comes much quicker.

    you should know about the limit up and down, which is specific to futures and can bring disaster to your account [potentially] with overnight positions..

    in another thread we already mentioned that one is not better than the other [stocks vs futures]. it is different but it is trading [trends, mass psychology, risk/reward, etc.. all apply]. So it is up to you.

  3. There is no reason at all. E-minis are better than most think. I would caution you from trading 5 contracts. I would
    only trade one. Also consider spreads naz versus sp - I am
    not sure what is the margin but, after studying the spreads
    you could trade that for bigger size if it's going your way.
    Right now there is a divergence naz is getting stronger and
    I suspect sp will fall due to higher expectations and earnings woes. So my idea is to short the sp and buy the naz. even if both fall - you could make money by the
    sp falling faster and more.
    "these are not recommendations and trade these ideas as is.
    no warranties, no promises, no implied client/advisor relationship"
  4. E-Minis are superb trading instruments in many, many ways ----- but there is one major catch. You must be able to ruthlessly, automatically, efficiently cut your losses without a second thought. Leverage simply means that positions can move very quickly and very far either against you or for you, and you can't have any of the deer-caught-in-the-headlights reactions to adverse situations. I often liken futures trading to driving a Ferrari as opposed to most stocks which (most of the time) are more like driving an average car ---- everything proceeds in fast motion, sometimes at warp speed. It's exhilarating, but you must be skilled and swift enough to avoid the ever-present possiblity of crashing. But if you have a top-notch mastery of technical analysis, a firm discipline, and a decent and deserved degree of self-confidence, there's no reason not to go for e-minis ----- the upside potential is there nearly every day, and it's often substantial.
  5. 5 contracts = 5*1675 ? Is that daytrading margin? Which broker offers that margin? I thought initial margin required by the CME for emini NQ was $6750. I am going to start daytrading the emini soon, one contract at a time. What is the risk of lock limit with stock index futures? Will a broker like IB allow you to use option strategies (synthetic long or short) to close a position in case of a lock limit? What are the margin requirements for this kind of option strategy?

  6. ehlaban



    I'm not sure what you mean,
    Initial margin = $ 6750
    Maint. = $ 5400

    I don't know if this is per contract
    or total.
  7. per contract
  8. tntneo

    tntneo Moderator

  9. For those new to e-mini trading, assuming you're a strict daytrader and never hold overnight, your chances of getting locked into a limit down position are very remote. That would only occur on one of three eventualities:

    1) a total catastrophe in the world ----- WW3 breaks out, someone detonates a nuke or an equivalent event as prices collapse instanteously

    2) you're holding a big loss already, and let it keep running indefinitely until limit down is finally reached.

    3) you try to bottomfish just above a limit-down point

    Even on the NQ, RTH (regular trading hours) limit-down moves are fairly rare ---- there were perhaps a dozen or so during the plunge this February to late March. And all of those seriously affected only traders who were long and continued to hold long positions in the face of severe moves against them or who very stupidly tried to pick a bottom and went long just as limit down was being approached. If you never bottomfish in the vicinity of potential limit-down situations and get out of a position as soon as it turns substantially against you, you should almost never have a problem getting locked into limit-down, again assuming you go flat at the end of regular trading hours.
  10. dozu888


    The only advantage in trading stocks is you can do a little top-down analysis. That is all.. and for the NYSE players, there are more sectors/variaties to choose from.

    Other than that, emini is real cool.
    #10     Jul 29, 2001