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Paid Program for CMEGroup: New Micro E-mini contracts add precision for trading around non-farm payrolls and FOMC releases.
One-Tenth The Sizeon four major indexes: S&P 500, Russell 2000, Nasdaq-100 and the Dow Jones Industrial Average. These contracts give traders another way to approach the scheduled economic reports that are so much a part of the market.
For example, in the S&P 500 E-mini futures contract, the tick value is $12.50. For each 0.25 of movement, your profit or loss will fluctuate by $12.50, per contract. With the Micro E-mini futures contract, your profit or loss will fluctuate by $1.25 per contract .Let’s use the example of trading an FOMC policy announcement. These decisions come out at 1 p.m. Central Time. Shortly before 1 p.m., an investor may decide to buy one E-mini S&P at 2935.00 and potentially exit five points higher at 2940.00. That would be a profit of $50 x 5=$250. Alternatively, an investor could buy 10 Micro E-mini futures at that same 2935.00 price but instead of exiting the entire position at 2940.00 the opportunity presents itself to possibly scale out of the position by selling one micro at 2940.00 and nine more at each higher level . A trailing stop strategy can potentially be employed to realize an average profit five points higher while having no more capital at risk. Why is this launch significant? Because an active trader will be able to more precisely manage risk for less cash and less margin. There also will be more opportunities to scale in and out of positions for the same amount of capital at risk. Traders love benchmark E-mini contracts because of the extremely high liquidity. There is virtually no slippage. While Micro E-mini futures won’t be at that level of liquidity right away, they are most assuredly a powerful new tool for traders. And when it comes to the daily trickle of economic reports that often drive markets, even the most savvy traders can use all the tools they can get. This content was created and provided by the sponsor. Neither Dow Jones nor the news or advertising departments of MarketWatch were involved in the creation or review of this content.
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