More and more people want to get into day trading. We hear them say, “I am interested in day trading but I don’t have the funds necessary to open the account and meet the minimum requirements. Since 9/11, day trading stocks requires at least $25,000 in your brokerage account. With the economy as tough as it is for everyone, with highest ever unemployment, $25,000 can be a barrier.
Here is a way you can be day trading and not have $25,000 in your account. Get another form of trading education… learn to trade Emini Futures. Emini Futures trading allows you to open a brokerage account with just $2,500, a fraction of what it costs for day trading stocks. And Emini trading can be done with only $500. Several highly volatile Futures contracts require just $500 / contract. Is there a stock that you could be trading for $500 that has volatility and liquidity?
Here is one contract you can use for day trading, the Emini S&P 500. On margin, it costs only $500/contract to trade, and some brokerages require even less.
The Emini S&P 500 is a Chicago Mercantile Exchange (CME) Futures Contract. The “E” symbolizes that the S&P 500 day trades “electronically” over the internet. The “Mini” symbolizes that the S&P 500 is a smaller version of the S&P 500 contract traded by the larger hedge funds and professional institutions. Just as a note, Futures trade in “Contracts” not shares. The symbol for the Emini S&P 500 contract is “ES”. Remember, trading this Emini compares with trading each of the top 500 stocks that make up the S&P 500 Index, all at the same time. The Emini S&P 500 Futures Contract appreciates and depreciates in step with the S&P 500 Index on the New York Stock Exchange. The CME created this Futures contract because you cannot trade an Index.
Think of day trading Emini Futures as the same thing as day trading stocks. Your technical analysis charts that you use with stocks work the same, with MACD, stochastics, moving averages, etc. You can use the same trading strategies and same trading software that you would when you are day trading stocks. You can setup up trading alerts, the same alerts that work with your stock trades. Best of all, you are trading the S&P 500 Emini, a contract that represents all the top 500 stocks on the NYSE. You’ll only need 1 technical analysis chart to represent all 500 stocks, not 4 or 5 charts.
To be daytrading 1 Emini S&P 500, you’ll need about $500 / contract. Of course, that depends upon your broker. Emini S&P 500 Futures contracts trade on margin. Your brokerage decides the margin rate he can offer to each customer. Having said that, most Futures brokerages will allow you to trade the S&P 500 Emini with 1 contract for $500. As a note…you really ought to open an account with an actual Futures broker, not a multi task brokerage that primarily trades stocks and by the way also trades Futures. The reason for this is that futures brokerages offer lower margins and discount commissions.
Day trading Emini S&P 500 is in “ticks” and 1 tick earns you $12.50 profit. 1 tick equals 1 price movement. Think of it as a 1 penny increase on your stock.
Example: Lets compare day trading a stock that costs $25/share and day trading 1 S&P 500 Emini Futures contract. You’ll need to trade a 100 share lot, so right away you need $2500 to trade that stock. With the S&P 500 Emini you can be daytrading with $500 for 1 contract. To earn $12.50, the 100 shares of stock need to move up about 13 cents, 13 price movements. The S&P 500 Emini only has to move 1 tick — 1 price movement. If you matched investments, you could be trading 5 S&P 500 Emini contracts for the same $2500. Then 1 tick = $60. Now 100 shares of stock needs to move up $6.00, 600 price movements to match the profit from trading the S&P 500 Emini’s 1 price movement.
You’re only moving up 1 price movement with S&P 500 Emini Futures, and 1 price movement could well be under 4 minutes of live trading time. Mind you, it could be that your elapsed time trading in front of the computer is longer than 4 minutes. But we’re talking actual day trading live in the Futures Market, less than 4 minutes.
If you are interested in this kind of day trading, you should attend a Monday night http://Shadowtraders.com Webinar and see for yourself what Emini S&P 500 Futures trading is all about. Shadowtraders offers an online trading course, a 4-Day intensive online trading seminar, trading software, trading strategies and trading alerts using technical analysis charts.
Barbara Cohen is a professional day trader. She has trained hundreds of students to trade Futures with Shadowtraders trading systems. Before you purchase any trading software, make sure you attend Shadowtraders Monday Night Webinar, and hosted by Barbara Cohen
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