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This Blog provides futures market outlook for different commodities and futures trading markets, mostly stock index futures, as well as support and resistance levels for Crude Oil futures, Gold futures, Euro currency and others. At times the daily trading blog will include educational information about different aspects of commodity and futures trading.

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Micro E-Mini Futures, The Next Big Thing in Equities Trading

by John Thorpe, Senior Broker

I was fortunate enough to view this morning’s CME webinar on the new Micro stock indices “Micro-E mini Futures contracts” presented by the CME Group.

I hope you too were able to join this well publicized webinar introducing these new hedge, spreading and trading tools.

 

If you were not, I’d like to use this space to share a few highlights of the new contracts with you.

 

First, you need to open a futures account in order to trade these products. They are not available in your equity trading account.

 

Unconventionally, I’d like to start with the ending Q and A portion where over 100 questions were generated for the host during the 1 hour presentation, a good 25-30% of the questions asked “What will liquidity be like?” or Will they be as liquid as the e-mini-s?”

The answer?

 

“ Good questions but we just don’t know” . “We have no way of knowing but are very excited to launch these products as they are based on some of the most liquid futures contracts in the world.” This from David Lerman, Sr. Director of Education at the CME Group and he went on to say “Of note, when the Mini S &P began trading in September of 1997, the very first day, 7494 contracts changed hands with no market makers. For the Micro product launch, there will be 8 market makers.”

I’d like to share a few highlights of the E-Micro’s vs ETF’s and use the S&P 500 index for comparison purposes.

 

 

Micro’s will be 1/10th the size of their parent contracts, ES,NQ, YM and RTY

The symbols for the micros will be mES, mNQ, mYM and m2K.

Clearing

Think about the multiple uses for these contracts and ask your broker at Cannon how to employ them. Spreading ratios within the Micro Group are recognized as well as spreading opportunities against the larger, parent Mini contracts as well as providing a cost effective strategy Scaling in and scaling out and of course longer term holding with less dollar volatility. Finally, from a tax treatment perspective and please check with a competent tax planner, your gains on futures are taxed at a more favorable rate than your equity gains are and of course, you can trade these products in a Traditional IRA, Roth , Rollover IRA or a number of other retirement vehicles, please call your Cannon Broker and ask which account type may be best for you.

 

Micro-E-Mini Fact card

https://www.cmegroup.com/trading/equity-index/files/cme-micro-e-mini-futures-fact-card.pdf

Start Trading MICRO e-minis with a demo account

 

Cannon Trading is an independent futures brokerage firm established in 1988 and located in the heart of the Beverly Hills financial district. Our mission is to provide reliable service along with the latest technological advances and choices while keeping our clients informed and educated in the field of futures and commodities trading.

Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

Posted in: Future Trading News  

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