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Main Dictionary E

E-mini

E-mini is a highly liquid, low margin and affordable traded with help of the electronics agreement Standard & Poor’s 500 Index that firstly appeared on September 9, 1997. It takes only ⅕ of  the size of a typical one and is mostly traded on the Chicago Mercantile Exchange (CME).

E-mini is regulated in order to ease transactioning on the futures exchange. Like all futures, it consists of comprehensive data. E-mini includes an agreed and fixed date and price of a sale or purchase of assets, along with the characteristics and the amount of the particular good. Most commodity contracts of this type are delivery settled, while index futures are settled by cash.

E-mini commitments are indistinguishable from normal ones. They enable traders to hedge against stock market drops or gamble on prices of certain goods. 

When it comes to trading mini-futures contracts, their liquidity can be highly dependent on the market. A lot of them are not popular and are characterized by a relatively small number of participants and trading volume, while others, on the contrary, are very active and show significant trading capacity.

Economical superiorities of the E-mini

Before the appearance of E-mini on the stock market, they were only exchanged by corporate investors due to its high price. It made E-mini not accessible to individuals. Nowadays, the E-mini according to the statistics is one of the most ever traded futures settlements in the whole world since electronic trade made it tradable almost day-and-night from Sunday to Friday. Settlements are divided for quarters beginning in spring (March), summer (June), fall (September), winter (December) and are listed for five consecutive quarters. Its popularity resulted in the expansion of the number of similar contracts. E-mini cover various indexes, some of them are:

  • S&P 500;
  • Dow Jones Industrial Average (DJIA);
  • Nasdaq 100;
  • S&P MidCap 400;
  • Russell 2000.

It also includes hard (oil, gold, copper) and soft commodities (wheat, corn, soybeans) and currencies.

Features of the E-mini commitment are:

  • high liquidity;
  • economical brokers’ commissions; 
  • low additional rates;
  • almost twenty-four-hour trade;
  • volatility;
  • affordability;
  • high diversity.

Of course, the mini stock index contracts offer traders the highest level of liquidity. For example, the daily trading volume for S&P 500 Index mini stock futures contracts is typically as high as 1 million commitments. Large volumes provide critical for effective short-term trading the Depth of Market (DOM). Nevertheless, with the right approach, even in unfavored markets it is possible to trade effectively and, although slippage is certainly a problem, sharp price fluctuations can open new trading opportunities.

When trading mini futures contracts, market participants have access to a high level of leverage. Low margin requirements give futures traders the freedom to increase the size of their traded positions.

Terms of the E-mini

E-mini is 20% of the size of a standard futures settlement presented on the stock market. Price of the contract times a commitment-specific duplicate($50 for E-mini) defines the agreement size (value). So if E-mini is traded at 3000 the contract size is $50 x 3000 = $150000.

Price increments or tick size is 0.25 points of index or $12.50. So if the futures price grows by 0.25, the value will rise by $12.50.

E-minis can be more liquid than standard agreement and have lower commissions -- but they can also be more volatile. That is why more E-minis are traded on the than standard S&P 500.

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