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summary This article explains what index futures are, it goes on to further explain the basics of Emini Futures S&P 500 and Nasdaq 100, stock symbols, tick size and their equivalent value in dollars. What are Index Futures? Future contracts originate from commodity trading. A future contract is an obligation to buy/sell a certain quantity of commodity at a specific date for a specific price determined at the outset of the contract. Future contracts are frequently used for hedging risks and also for speculation. For example, with the recent hike in oil prices, an airline company which uses a lot of fuel might want to hedge it's exposure to oil prices through the purchase of oil futures. If the price of oil is $60 now and is expected to go up to $70 within 3 months, the airline would hedge its exposure by purchasing the 3 month future contracts so long as the agreed price is less than $70. Oil prices now $60 Expected oil price in 3 mth's time (by airline) $70 Price of 3 mth oil contract (by oil producer) $68 Actual price 3 mths later $65 Let's assume the airline can find an oil producer willing to sell oil 3 month later for $68, the company would enter a futures agreement with this oil producer for delivery of a certain quantity of oil in 3 month's time. If the price of oil falls to $65, the airline still has to purchase at the agreed price of $68. But what propelled the airline to enter the futures contract in the first place is its expectations of future oil prices going up to $70 in 3 months and buying at a price below $70 (3 months later) seemed reasonable to the company. Index futures are cash settled, there is no physical delivery of commodity as in the case of wheat, corn, etc. Although index futures can also be held for the long term, the time span we are concentrating on is a day. We are using the index futures as a vehicle for speculation and not for hedging as in the case of the airline company. --------------------------------------------------------------------- What is the Emini S&P 500 and NASDAQ 100? NASDAQ 100 and S&P 500 index futures is listed on the Chicago Mercantile Exchange (CME) and trades on the Globex electronic system. CME acts as the counter party for each trade, hence if you short futures, CME will be taking the long position and vice versa. NASDAQ 100 Emini contracts is actually one fifth the size of their larger counterparts, the NASDAQ 100 index futures. Each point of the index will represent $20 and the minimum fluctuation ( tick size ) is 0.5 points which is equivalent to $10. S&P 500 Emini contracts is actually one fifth the size of their larger counterparts, the S&P 500 index futures. Each point of the index will represent $50 and the minimum fluctuation ( tick size ) is 0.25 points which is equivalent to $12.50. Globex opens from 16:30(EST) on weekdays and 18:00(EST) on Sundays and public holidays. The closing time is 16:15(EST) on all days. However, there will be a scheduled maintenance of Globex from 17:30 till 18:00 (Monday through Thursday, nightly). I know the timings can be quite complicated, however as day traders, we are mostly concerned with trading when the market is opened as we have to capitalize on the higher liquidity available. I do not recommend entering trades after market hours, due to low volume which leads to slippage. The time span you have to concentrate on is really the market opening hours from 9:30 till 16:15 (EST). More information regarding the contract specification of the Emini can be found on CME's website. --------------------------------------------------------------------- symbols for the S&P 500 and NASDAQ 100 Emini index futures Both the NQ and ES emini contracts have expiry months in March, June, September and December which are denoted by the letters "H", "M", "U", "Z" respectively. Hence NQ05Z will represent the NASDAQ 100 emini contract with expiry month in December 2005. Similarly, ES06H will be the symbol for an S&P 500 emini contract with expiry month in March 2006. March H June M September U December Z Michael Taylor is a professional trader and webmaster of www.daytradeemini.com He regular updates his trading blog at www.daytradeemini.com/blog with educational articles and trading records.
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Emini Futures S&P 500 and Nasdaq 100 : Basic Trading Info
summary This article explains what index futures are, it goes on to further explain the basics of Emini Futures S&P 500 and Nasdaq 100, stock symbols, tick size and their equivalent value in dollars. What are Index Futures? Future contracts originate from commodity trading. A future contract is an obligation to buy/sell a certain quantity of commodity at a specific date for a specific price determined at the outset of the contract. Future contracts are frequently used for hedging risks...
[Posted: 2010-01-14 21:50:06]
Day Trading Emini Futures --Types of Orders
Types of Orders Placing orders is an art in itself. Beginners often do not know when to use market orders and limit orders. Different orders are used in different market conditions. But the limit order is the one that is most versatile. Understanding a limit order is essential to your trading success. I will only discuss the case for buying, the reasoning and mechanism is the same for shorting. Market Order In a market order, you are basically giving instructions to your broker to buy at t...
[Posted: 2010-01-14 21:50:06]
FOMC minutes -- $2380 profit!
How's your first trading day? Not bad for me. I just made $2380 trading the NQ ( Emini Nasdaq 100 futures). It was virtually a riskless trade. I timed my trade just after the release for the December FOMC minutes at 1400. Why did the market go up? You don't need to know exactly why the market go up. Usually market reaction to FOMC minutes is limited. But today, th...
[Posted: 2010-01-14 21:50:06]
Emini Futures Day Trading : Fundamentals and Paper Trading
Emini Futures Day Trading : Fundamentals and Paper Trading Fundamental Analysis Fundamental analysis is a methodology for analysis of a company as a viable stock that you want to hold for long term. Fundamental analysis is more widespread in the world of investing since you are going to hold your companies for 10 to 20 years, you do not wish that your companies go bankrupt the next day. Some of the common ratios used are P/E ratios (price earnings ratios) which measures the relative price of...
[Posted: 2010-01-14 21:50:06]
Gap Closure in a tepid market --> $760 profits
5 Minutes Candlesticks NASDAQ 100 Market gapped up today on better than expected retail sales numbers... As we know, yesterday FOMC announced that they are going to leave the rate unchanged and that inflation is still up... Market reaction was muted at best.. From this we can deduce that market participants have mixed reactions about the economy ahead, bulls are not ...
[Posted: 2010-01-14 21:50:06]
MACD crossed zero line, bounce from Moving Average --> $690
5 min Nasdaq 100 Emini Hi, The market has been plunging from the morning session and its reasonable to expect either a retracement or a continuation of the downtrend in the afternoon session. After a slight pullback, at 13:55, price started to bounce off the moving averages with the short-term MACD crossing the zero line.... I shorted 1 contract ...
[Posted: 2010-01-14 21:50:06]
Hammer Candlestick, Double Bottom, MACD up, Stochastics up, Employement report --> $940 profits
5 minutes Nasdaq Emini CandleStick Chart Hi, How's it going? I hope you captured this trade. This is a god send! Even from a fundamentals perspective, market sentiments are good. Better than expected payroll numbers is definitely good for stocks in a time when we are worried about a soft landing... You can read more about the fundamentals below: Do note that, no matt...
[Posted: 2010-01-14 21:50:06]
Core CPI unchanged , Inflationary Pressures Moderating --> Gap Up --> $640 profits
5 minutes Nasdaq 100 Emini Futures Hi, How's it going? Today price gapped up by almost 15 points due to better than expected CPI data. While what do we mean by better than expected? A bunch of economists expected the november CPI to increase by 0.2% but actual data turns out that the Novement CPI is unchanged. If you remembered economics 101, CPI is a measure of ...
[Posted: 2010-01-14 21:50:06]
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