Posted By: Ilan Levy-Mayer Vice President, Cannon Trading Futures Blog
CME MICROS, more commonly known as Micro E-Mini Futures Contracts, have been trading with great success since they were first introduced by the CME Group in 2019. In terms of liquidity, for both smaller and newer futures traders, the Micro E-Mini has made futures trading more affordable and accessible to the independent investor, who may not have large amounts of risk capital to invest.
Standard futures contracts and Mini Futures Contracts are sized to a certain value multiplied by the futures price. For example a mini contract sells for $50 x the contract price. The E-mini S&P 500 has a contract size of $50 times the E-Mini futures contract price, which if the contract price is say $1,240, then the contract value is $62,000.
CME states all four of the Micro E-Mini Futures Contracts are 1/10 the size of their respective E-mini futures counterparts – allowing all traders futures exposure without the notional constraints of the larger contracts. These Micro Minis include the follow contracts: S&P 500, Nasdaq-100, Russell 2000, and the Dow Jones Industrial Average.
What Is a Micro Mini Futures Contract
Micro E-Minis are one-tenth of the size of a traditional E-Mini contract, which allowing for lower margins and requires a significantly lower investment capital than their standard counterparts.
If the S&P 500 index is 2950, the micro e-mini value is 5 times the value of the index or $14,750 versus the value of a standard e-mini contract, which is 50 times the price, and would set an investor back $147,500. While the contract value is significantly higher, so is the exposure to market fluctuations. This is where the benefit of the Micro E-mini comes in.
The Micro E-Mini contract is a significantly smaller contract than the mini or standard futures contract, which can set an investor back several thousand dollars. The micro E-mini offers a much more affordable way for traders to access the equity index futures markets.
How Do Micro E-Mini Futures Contract Work?
While a standard E -mini S&P 500 futures contract has a value of $50 times the contract price – the Micro E-mini S&P 500 futures contract has a value of just $5 times the contract price, making this a much more affordable futures contract vehicle.
Your upward and downward exposure to fluctuations in the market is significantly reduced.
Most traders will use MICROS for short term trading, and can day trade the micros with less than $2,000 in the account. Both losses and gains are smaller relative to the Mini S&P, but there are still risks associated even if you trade Micro E-Mini Futures.
Why Invest in Micro E-Mini Futures
Experienced traders will enjoy the efficiency of the contract, the ability to sell short with ease, and the possibility of benefitting from short- and long-term profit and loss tax rules. New traders will appreciate more affordable options of Micro E-Mini Futures Contracts, that incur less risk at just $5 times the contract value and have lower margins.
This allows new investors with limited assets to participate in this exciting market with limited exposure to risk, and for a much larger pool of traders. Cannon is excited to bring in new traders, as well as, offering more diverse and flexible portfolio of futures trading options to new and current clients.
Contact Cannon Trading here for more details on investing in Micro E-Mini Futures Contracts, or other futures investments.
“The MICROS offer a few advantages for both new and experienced traders”, says Ilan Levy-Mayer, Cannon’s VP. “If one wants to move from demo to live trading, one can start with the MICROS and utilize less capital and ease into the live trading part with smaller contracts. Another advantage is the ability to scale in and scale out and last but not least, longer term trades or maybe swing trades might be better utilized using the smaller MICROS.”
In addition to the micro e-minis, Cannon Trading brokers can also help investors trade MICRO gold. Learn more here.
Appx Daily & Monthly Volume(December 2020)
Micro E-mini S&P March Contract (MESH21) Daily Volume – 57,180
Micro E-mini S&P March Contract (MESH21) Monthly Volume – 1,143,585
Micro E-mini Nasdaq March Contract (MNQH21) Daily Volume – 227,598
Micro E-mini Nasdaq March Contract (MNQH21) Monthly Volume – 4,551,970
Micro E-mini Dow Jones March Contract (MYMH21) Daily Volume – 50,061
Micro E-mini Dow Jones March Contract (MYMH21) Monthly Volume – 1,001,220
Micro E-mini Russell March Contract (M2KH21) Daily Volume – 34,335
Micro E-mini Russell March Contract (M2KH21) Monthly Volume – 686,700
Micro gold Feb Contract (MGCG21) Daily Volume – 51,118
Micro gold Feb Contract (MGCG21) Monthly Volume – 1,022,350
Benefits of the Micro E-Mini Futures Contract
The economical aspect of the Micro E-Mini is perhaps its largest draw. In the S&P a trader traditionally must maintain a minimum margin of $13,000, but with the new Miro E-Mini, that margin may now be as low ae $1,300. With these lower margins, more and more traders will now be able to make investments based on where they think the markets may be headed with Stock index futures contracts. Those who now trade with exchange-traded funds (ETFs) can now more easily expand to the futures market.
Cannon Trading stresses the importance of finding a broker that offers the most up-to-date technology and resources available. They also stress the importance of choosing a firm whose brokers have experience and specialize in an array of market corners, thus making it easier for them to customize their services to every trader’s needs and objectives. “At Cannon Trading we offer an expansive selection of cutting-edge technology, and our brokers are knowledgeable and experienced enough to assist any level of trader with his or her needs”.
FREE, real-time demo, with live prices of ALL MCIROS futures available at:
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.