E-mini futures are smaller-sized versions of major indices and commodities traded on exchanges like the Chicago Mercantile Exchange (CME). With their smaller size and flexibility, E-mini futures have opened new opportunities for institutional players and individual traders to participate in the market.
E-mini futures came into existence in September 1997 as a response to the growing demand for more accessible trading options. The original exchange-traded S&P futures introduced in 1982 had large contract sizes, which limited participation to institutional players and large traders. As the value of S&P 500 index skyrocketed, it became challenging for smaller institutions and retail individuals to enter the market.
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However, the introduction of electronic trading platforms and E-mini futures on the CME's GLOBEX platform marked a turning point. E-mini S&P 500 futures quickly gained popularity, offering smaller contract sizes and extended trading hours. The trading volumes surged, establishing E-mini S&P 500 futures as the world's most liquid and extensively traded equity derivative on multiple exchange platforms.
Today, E-mini futures extend beyond equity indices to include commodities and currencies, providing diverse trading opportunities. The most popular E-mini futures include the E-mini S&P 500 (ES), followed by the E-mini Nasdaq-100 (NQ), the E-mini Dow (YM), and the E-mini Russell 2000 (RTY).
Trading E-mini futures involves understanding the contract specifications and utilising the right strategies. Here are the steps to start trading -
E-mini futures offer numerous advantages, contributing to their widespread popularity among traders and investors. Here are some key benefits -
E-mini futures have also made their way into the Indian market, with the NSE International Exchange listing them for trading in September 2011. Indian members of the NSE and their clients can trade E-mini futures in US dollar terms without additional paperwork or permits. This enables Indian traders to access global markets conveniently.
In 2019, the CME introduced Micro E-mini futures, traded at 1/10 the size of regular E-mini contracts. These contracts aim to make trading even more accessible to individual investors and novice traders. With benefits such as lower margin requirements, manageable tick sizes, and the ability to convert to full-sized contracts, Micro E-mini futures have quickly gained popularity.
E-mini futures have transformed the trading landscape, providing traders with an accessible and versatile instrument for trading and hedging.
You can consider E-mini futures if you are looking to diversify your portfolios, access leverage, and trade with lower capital requirements. However, it's essential to understand the risks involved and develop a well-rounded trading strategy before beginning.
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