In today’s modern markets there are many exchanges and so many instruments competing for your trading business that you cannot help but ask yourself, “why should I choose the Eminis as my vehicle of choice?” The eminis offer retail traders a number of different advantages that other markets cannot afford. I am not going to try and convince you why you should be trading eminis over stocks, bonds, or forex in this article, I am simply going to explain to you why I choose to trade the Emini market.
Emini Advantage: Low Prep Time
Following the emini markets is much less work outside of trading hours than other forms of trading. There are no hours spent analyzing different stocks or markets. The major indices are the only eminis available to trade; therfore, much less time needed looking for set ups. That frees you up to analyze the charts and become well acquainted with the typical price action of that particular index. Emini traders can focus all of their attention on the price action of a single chart. Trading the indices also means that individual company news events are much less likely to move the market one way or another. The price action is very smooth and an emini trader only needs to worry about large news releases affecting the whole of the markets.
Emini Advantage: Hours of Operation
The eminis are traded on the CME Globex electronic exchange. This allows the contract to be traded near 24 hours per day, and allows the retail trader more choices. Now traders can get in and out of positions whenever they choose. They can set their own hours and even take advantage of other market openings. For example, one could trade the European open or trade late into the night with Australian or Chinese news affecting the global economy. The result is a much smoother moving market with volume spread across the entire trading day instead of packed in between regular trading hours.
Emini Advantage: Volume
Every decent trader knows the importance of volume and participation in the markets. Novice commodity traders are usually painfully shown why markets need liquidity in order to be safe. The more volume the better the spread and it is thin markets that can be a trader’s worst enemy. The eminis are the most heavily traded futures contract in the U.S. The amount of participants means that there will always be a trader willing to take the other side of your position. Low spreads equals better and tighter fills which is money in a trader’s pocket. More volume equals more opportunity.
Emini Advantage: Spot Professional Participation
The biggest benefit to the accurate data that the regulated emini markets provide is the ability to see the difference between professional money and retail money. An experienced emini trader can use the time and sales window to accurately determine who is buying and who is selling based on contract size. Novice retail traders usually trade in very small quantities. They lack the financial capabilities to trade larger lot sizes. Simply by watching the tape, traders can identify whether the pros or the amateurs are trying to move the market. This is a huge advantage for the skillful emini trader because it means he or she can identify where big money is pushing the market. Small time retail traders do not have the ability to move these markets. They can only speculate on where the big money will take them. For successful emini traders, being able to identify big money participation means having one leg up on the competition.
Emini Advantage: Technical Markets
The emini futures are participated in by a number of different players. Institutional money, major banks, Hedge Funds, CTA’s, CPO’s, retail traders, hedgers and speculators. All those different ideas in the market means the chart is very technical in nature. There are very few parabolic movements and price action can flow in very predictable manners. The amount of computer trading happening in these markets also opens up possibilities for the advanced emini trader to make some money. Computers operate in a very predictable manner and if you know when or why a computer will take a position and you can spot it early enough you can benefit from that information. The large amount of algorithm trading also prevents the indices from major sell offs or covering rallies. Very rarely will the emini’s run in only one direction with no retracements. Retracements are needed in order to get intelligent entries and computer trading causes a lot of backing and filling in the emini markets and this gives astute traders the possibility to take advantage of these situations.
Emini Advantage: Cost of Doing Business
Emini futures have the most attractive pricing structure for commissions when compared to other markets. Trading traditional stocks requires a large amount of capital to day trade and commissions can be quite high. A trader who trades very small lot size can get commissions in the low $5.00s without even haggling with their broker. A larger sized trader can take advantage of leasing or buying a seat at the exchange and depending upon average trading size commissions can get as low as $1.00 a round turn. Those sorts of commissions allow the trader to be in and out of the market more often which means scalping using heavy size becomes a viable option for retail traders.
Emini trading is the ultimate day trading activity. Low fees, solid volume, technically traded, low entry requirements, and other benefits all add up to the eminis being the best possible solution for both novice and experienced day traders. If you are ready to test yourself in the pinnacle of the trading world, check out the emini futures and you will never look back.