Archive for ‘S&P 500’

Day Trading the ES Emini: Contract Considerations

By trader7757, 16 January, 2010, No Comment

Contract Considerations for Day Trading the ES Emini

It garners more trading volume than any emini contract on the Chicago Mercantile Exchange, and has run away (in trading volume) from any other futures contract currently traded. It the pint sized version of the S and P contract that traders have flocked to in recent years. Better yet, it is specifically designed and priced for the individual trader. What’s not to like?

I spend a decent amount of time in trade rooms, helping novice day traders develop their trading style. One thing I have noticed, especially among the novice day traders, is their lack of awareness of exactly what they are trading. So I thought I would write an article that gives the very basics of the ES contract.

What is the S and P 500? You would be surprised at how many traders can’t definitively answer this question. The S and P 500 is a capitalization-weighted index of the 500 largest, publicly traded, large-cap stocks in the United States. The index has been around since 1957. The index is calculated and published by Standard and Poor’s, hence the S and P in the title. Incidentally, the index reached it’s highest point in March, 2000 at 1552.87. In 2010, it was trading in the 1100 range, a far cry from it’s apex.

The ES emini contract was established on Sept. 9, 1997, and has grown steadily since that date. Some specifics on the contract are:

1. The contract months for the ES are
a. March         =H
b. June            =M
c. September = U
d. December   = Z

Notice the contract months are designated by letters, and the contract designation is calculated by combining the letters with the ES designation, the month, and finally the last number of the year. For example, ESM0= the ES contract for June in 2010. Once you trade the ES for a period of time this nomenclature becomes second nature.

Many have been confused by the pricing model used for the ES contract. It is fairly simple. The ES emini is one fifth the value of the traditional S and P contract, so each point is worth $50 dollars, as oppose to $250 per point on the big contract. Each point is divided into ticks or one fourth point, or $12.50 per tick. So, 4 ticks at $12.50= $50.

The contract expires at 8:30 a.m. on the third Friday of contract month. (March, June, Sept. Dec.) It is fairly normal for traders to have abandoned trading the contract about two weeks before the expiration. Most futures brokerages announce the date of switch over to their clients, so there is generally not the confusion that you might expect at contract expiration. If you are a day trader, it is imperative that you switch to the new contract prior (preferably the above mentioned two weeks) and not trade the ES emini right up to expiration. Most of the volume evaporates from the contract on the switch date, and you could run into having make good delivery of the full delivery requirement of the contract.

The clear advantage of the ES emini contract is the tremendous liquidity, and thus you should never see slippage as a result of the contract trading thin. More than a million contracts are traded on an average day, which is astounding volume when taken against some of the thinner emini contracts offered.

The ES emini contract on the Chicago Mercantile Exchange, which has been a true innovator in the emini arena. The CME Globex is the actual home of the contract, and it trades during regular trading hours, takes a short break, and then trades all night until the opening of the next days cycle. The actual hours of trading are:

Monday-Thurs 5:00 p.m.-3:15 p.m. & 3:30 p.m.-4:30 p.m.
Sunday 5:00 p.m.-3:15 p.m.

Margins requirements vary by firm and whether you are trading intraday or holding contracts overnight. For inraday traders, you can find margin requirements as low as $400/contract and as high as $3000/contract. Of course, the lower contract margin requirement may tempt some traders into over trading their futures account, and this can be a real problem. In any event, the contract margin requirements vary greatly.

As you can see, the ES emini contract is a versatile and popular equity trading instrument. We have reviewed the monetary basis for the contract, as well as the calender specifics for trading. We have pointed out the margin requirements and trading hours, now all that is left is for you to perfect your trading style and enjoy trading this flat-out-fun trading instrument.

Is S&P 500 Getting Ready to Skyrocket or Collapse?

By trader7757, 13 December, 2009, No Comment

There’s no doubt about it, for the past four weeks the S&P 500 index has
been trapped in a trading range.

ES Emini Day Trading: Two Major Forces Collide in the Index Markets

By trader7757, 15 November, 2009, No Comment

On Wednesday, 11/11/09, the Dow Jones Industrial Index rallied to a 50% retracement level based on MarketClub’s Fibonacci measuring tool. The action today indicates that this level is very important and that it could be an important top for this market.

In my latest video I cover both the Dow and the S&P 500 and tell you what I think is going to happen to both of these markets in the near and intermediate term.

As always our videos are free to watch and there’s no need to register.

Click here to see this new video regarding the two major indexes I trade

From INO: Has the S&P broken final support

By trader7757, 3 November, 2009, No Comment

In the last video on the S&P 500 (10/27), we indicated that this market may have topped out for the year. Today’s action puts in place a weekly “Trade Triangle” which indicates that a temporary or a permanent top is now in place for this market.

In this latest video, I share with you some of the ideas that I think could potentially come into play for this market. Not only do I have some downside targets in mind, but I also see a pattern that could evolve in the next several weeks which will confirm that we’ve made a serious high in this market.

Click link to watch video

Watch this FREE and informative video-Has the S & P 500 broken final support?

What Does it Take to Become a Profitable Day Trader

By trader7757, 30 October, 2009, No Comment

I was reading an ezine article this morning and it went through a laundry list of things required to be a day trader. I suppose the author’s system might very well work, but it certainly seemed awfully labor intensive to be truly successful. It also was very capital intensive and relied upon the trader’s ability to forecast directional market moves. Yikes!

Step 1.

Decide what you want to trade. I try to trade the most highly leveraged investments I can find because it maximizes my return. For me, that would be index futures contracts. They are liquid, accessible and trade very much like equities. They are also highly leveraged, which gives the trader great potential for profit, and conversely, great potential for loss.

Step 2

Start with the YM contract, I believe it is easier to trade than the ES contract. Don’t start trading with real money, use a demo account and paper trade. You will need to learn a system to trade, and I have made some videos that hint at my trading technique but plan a launch of my entire system in the near future.

Step 3

Once you can trade on paper for consistent profits, it’s time to trade with real money. It is different with real money, and I can’t explain why, it just is. The hallmarks of a good trader are excellent technique and unfaltering discipline. Never take a trade on a hunch. You have a system, use it.

Check this amazing FREE trend anlysis report on any issue you trade, especially the eminis:

Step 4

Money Management is of prime importance in trading. Never risk more than 5-10% of your capital on a given trade. You should open an account with a minimum of $5000 and only trade 1 contract until you have raised your account balance substantially. Remember, 1 contract.

I have all sorts of recommendations for brokers, margins…etc, but that will come in time. For now, realize that leverage is a disciplined day traders friend.

Has the S&P Index Topped Out for the Year

By trader7757, 27 October, 2009, No Comment

There is compelling evidence that we may have seen a top in the S&P index. In this new short video, I show you the evidence that I have found which may point to the fact that we are going to see a correction in this index.

Is the NASDAQ Now in Thin Air?

By trader7757, 23 October, 2009, 1 Comment

Of the three major indexes we track: DOW, NASDAQ and the S&P 500, only the NASDAQ is in thin air.

What do I mean by thin air? So far the NASDAQ is the only index to make it past the 50% Fibonacci retracement levels as measured from the highs seen in 2007 and the lows that were made in March of this year.

Both the Dow and the S&P 500 have rallied strongly from their March lows but have not made it over the 50% retracement level.

Click here to see the video “Is the Nasdaq Now in Thin Air”

Many professional traders – myself included – are looking at the NASDAQ’s Fibonacci retracement as it represents a potentially key turning point for this year’s market.

While not all the pieces are in place to go short or get out of long positions, one of the first clues is being put in place today by the Japanese candlestick charts.

In my new video, I share with you the NASDAQ retracement levels, as well as one of the key components that could lead to a potential reversal to the downside.

As always, our videos are free to watch and there is no need to register.

Click here to see the video “Is the Nasdaq Now in Thin Air”

Enjoy the video, all the best.

A Great FREE Video from INO: Gold, Dollar and S and P Predictions

By trader7757, 5 October, 2009, No Comment

So what’s going to happen? I believe that we’ll have another economic downturn which is going to push the dollar to new lows, push gold to new highs, and push the equity markets back down to their March lows.

The Fractal Futures Trader