Trade The U.S. Indices With CME E-Mini Futures Contracts
By a wide margin, the most popular E-mini futures contracts are the equity index products listed on the CME. Featuring issues based upon the Dow Jones Industrial Average (DOW), Standard and Poor’s 500 (S&P 500), NASDAQ, and the Russell 2000, there is a product for every type of equities trader.
Even though the equity index E-minis face the U.S. stock market, they are not all the same. There are some key differences to be aware of, specifically in regards to the contract specifications:
| Product | Symbol | Asset Class | Tick Value |
|---|---|---|---|
| E-mini S&P 500 | ES | Large Cap Stocks | $12.50 |
| E-mini DOW | YM | Large Cap Stocks | $5.00 |
| E-mini NASDAQ | NQ | Tech Stocks | $5.00 |
| E-mini Russell 2000 | RTY | Small, Medium Cap Stocks | $5.00 |
The only common denominator these four products share is their prefix. Each pertains to a specific sector of the U.S. stock market and presents a custom degree of leverage. In addition, the process of price discovery local to each contract is distinct. Below are two additional areas in which the equity index E-minis differ:
- Liquidity: Although the four U.S. equity index E-mini futures contracts are all liquid, some feature greater market depth than others. The E-mini S&P 500 is far and away the most heavily traded issue, regularly topping volumes of one million contracts per session; the other listings typically post volumes between 200K and 500. Accordingly, trade efficiency will vary as factors such as volatility and slippage fluctuate.
- Pricing Sensitivities: E-mini equity index futures are not a “one size fits all” way to trade the U.S. stock market. Offerings are sensitive to a collection of sector-specific underpinnings. Earnings reports, breaking news, and various economic events can impact each product very differently. For instance, positive earnings reports from Apple and Amazon.com may boost the E-mini NASDAQ, while the E-mini DOW simultaneously lags due to a plunge in Boeing stock.
Don’t Forget About Commodity And Currency E-minis
Commodity and currency E-mini futures are traded by a broad spectrum of market participants for a variety of reasons. From active speculation to producer hedging, the CME’s lineup of commodity and currency E-minis are ideal targets for thousands of traders every day.
Here are the premier E-mini markets offered on the CME:
| Product | Symbol | Asset Class | Tick Value |
|---|---|---|---|
| E-mini Crude Oil | QM | Energy | $12.50 |
| E-mini Natural Gas | QG | Energy | $12.50 |
| E-mini Euro FX | E7 | Currencies | $6.25 |
| E-mini Japanese Yen | J7 | Currencies | $6.25 |
In comparison to the CME’s equity index E-mini futures contracts, the currency and commodity offerings trade with vastly reduced liquidity. However, many tried-and-true strategies remain viable, including intraday, day, and swing trading methodologies. Although volume and depth-of-market can be sporadic, active periods regularly offer a collection of opportunities.
Getting Started With E-mini Futures
One of the great things about futures is that the trader has an ability to fully customize risk exposure. No matter if you prefer full-sized CME futures or the granularity of E-micro, Micro E-mini, and E-mini products, rest assured that there is an ideal substitute for your needs.