Micro E-mini Futures eBook! - Compliments of Infinity Futures
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Micro E-mini Futures eBook!
Compliments of Infinity Futures
TM
Source: Infinity AT
Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past
Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Micro E-mini Futures
Meet a smaller-sized contracts designed to make futures
trading more accessible to individual traders. Trade a slice
of our most liquid markets with the same capital efficiency,
flexibility and diversification potential as standard futures,
but for a fraction of the upfront financial commitment.
More access with 24-hour trading
When something big happens, why wait? Nearly 24hour
trading means you can act fast to adjust as soon as
markets move on global news.
More flexibility
Micro futures let you fine-tune your exposure and go
short as easily as you can go long: no short-selling
restrictions. Ease of going short!
More capital efficiency
At a fraction of the size of their standard or E-mini
counterparts, Micro futures carry a smaller margin
requirement. More exposure, less capital.
More opportunity
https://www.infinityfutures.com Explore markets that you may have thought were out of
trade@infinityfutures.com reach: gold, a major equity index, a major currency. Add
Twitter: @InfinityFutures
the benefits of diversification for lowering risk and
Instagram: @infinityfutures
+1.312.373.6220 increasing potential for rewards.
Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past
Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Micro E-mini S&P 500 Futures
Micro E-mini S&P 500 futures (product symbol MES) are
based on the S&P 500 Index, a broad-based market
capitalization weighted index that tracks 500 of the largest
(or large-cap) U.S. companies. This index is widely
followed as a key indicator of the health of the
U.S. stock market, This smaller-sized electronic futures
contract gives traders an opportunity to take positions
on whether the performance of the S&P 500 Index will
go up or down in value.
At $5.00x's the S&P 500 Index price, Micro E-mini S&P
500 futures provide a broader universe of individual
traders the opportunity to discover the benefits of
trading futures by lowering the amount of money
required to enter the market.
Why Trade Micro E-mini S&P 500 Futures
As a leading gauge of U.S. economy, this contract offers
hedging and risk management opportunities against
volatile moves in the U.S. stock market performance.
More cash efficient than trading the equivalent ETF. The
global markets don’t sleep. This contract allows traders
stock exposure and growth opportunities in an index that
offers almost 24-hour trading, six days a week.
How do you trade E-mini S&P 500’s?
Micro E-mini S&P 500 futures are “futures contracts” on
an equity index benchmark. They are cash-settled
contracts with quarterly expiration dates scheduled for the
months of March, June, September, and December.
https://www.infinityfutures.com
trade@infinityfutures.com With a single transaction, investors can use equity index
Twitter: @InfinityFutures futures products to manage risk or seek profits based on
Instagram: @infinityfutures whether they think the stock market performance will rise
+1.312.373.6220 or fall.
Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past
Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Micro E-mini Russell 2000 Futures
Micro E-mini Russell 2000 futures (product symbol M2K)
are based on the Russell 2000 Index. The Russell 2000
Index is a broad-based market capitalization weighted
index that tracks 2,000 small capitalization stocks covering
a wide variety of sectors in the US economy. The Russell
2000 is considered a leading benchmark for
U.S. small-cap stocks. This smaller-sized electronic futures
contract gives traders an opportunity to take positions on
the performance of the Russell 2000 index.
With a contract valued at $5 x the Russell 2000 Index
price, Micro E-mini Russell 2000 futures give more
traders the opportunity to discover the benefits of
futures, by lowering the amount of money required to
enter the market.
Why Micro E-mini Russell 2000 Futures
Leading indicator to where other indexes may move
towards. Allows for hedging opportunities against the
Russell ETF or other basket small cap stock positions. The
global markets don’t sleep. This contract allows traders
stock exposure and growth opportunities in a price
weighted index that offers almost 24-hour trading, six days
a week.
How do you trade E-mini Russell 2000’s?
Micro E-mini Russell 2000 futures are “futures
contracts” on an equity index benchmark. They are
cash-settled contracts, and these have quarterly
expiration dates scheduled for the months of March,
https://www.infinityfutures.com June, September, and December.
trade@infinityfutures.com
Twitter: @InfinityFutures With a single transaction, investors can use equity index
Instagram: @infinityfutures futures products to manage risk or seek profits based on
+1.312.373.6220 whether they think the index performance will rise or fall.
Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past
Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Micro E-mini NASDAQ 100 Futures
Micro E-mini Nasdaq-100 futures (product symbol MNQ)
are based on the Nasdaq-100 Index, which tracks 100 of
the largest (large-cap) domestic and international non-
financial companies listed on the Nasdaq based on the
market capitalization. This smaller-sized electronic futures
contract gives traders an opportunity to take positions on
whether the performance of the Nasdaq100 Index will go
up or down in value.
With a contract valued at $2.00x's the NASDAQ-100 Index
price, Micro E-mini Nasdaq-100 futures give more
individual traders the opportunity to discover the benefits
of futures, by lowering the amount of money required to
enter the market.
Why Micro E-mini NASDAQ 100 Futures
Offers hedging and risk management opportunities
against volatile moves in tech-based and other non-
financial companies.
More cash efficient than trading the equivalent ETF. The
global markets don’t sleep. This contract allows traders
stock exposure and growth opportunities in an index
that offers almost 24-hour trading, six days a week.
How to trade Micro E-mini NASDAQ?
Micro E-mini Nasdaq-100 futures are “futures contracts”
on an equity index benchmark. They are cash-settled
contracts, and these have quarterly expiration dates
scheduled for the months of March, June, September, and
December.
https://www.infinityfutures.com
trade@infinityfutures.com With a single transaction, investors can use equity index
Twitter: @InfinityFutures futures products to manage risk or seek profits based on
Instagram: @infinityfutures whether they think the index performance will rise or fall.
+1.312.373.6220
Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past
Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Micro E-mini Dow Futures
Micro E-mini Dow futures (product symbol MYM) are
based on the Dow Jones Industrial Average. This index
tracks 30 of the largest blue-chip companies in leading
sectors of the U.S. economy and serves as an indicator of
the health of the U.S. stock market. This smaller-sized
electronic futures contract gives traders an opportunity to
gain exposure on all 30 listed companies by trading a single
contract.
With a contract valued at $0.50x's the DJIA Index price,
Micro E-mini Dow futures give more traders the
opportunity to discover the benefits of futures, by
lowering the amount of money required to enter the
market.
How do you trade Micro E-mini Dow’s?
Offers traders capital efficiencies vs. ETF products. Ability
to short the index without stock loans or variable fees.
The global markets don’t sleep. This contract allows
traders stock exposure and growth opportunities in a price
weighted index that offers almost 24-hour trading, six days
a week.
HOW DO YOU TRADE MICRO E-MINI DOW FUTURES?
Micro E-mini Dow futures are “futures contracts” on an
equity index benchmark. They are cash-settled contracts,
and these have quarterly expiration dates scheduled for
the months of March, June, September, and December.
With a single transaction, investors can use equity index
futures products to manage risk or seek profits based on
https://www.infinityfutures.com whether they think the index performance will rise or fall.
trade@infinityfutures.com
Twitter: @InfinityFutures
Instagram: @infinityfutures
+1.312.373.6220
Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past
Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Who Should Trade Micro E-mini Stock Index Futures?
Traders in any of these categories can benefit from trading the CME Group’s Micro E-Mini
Futures.
Equity Traders
Options Traders
FOREX (Over the Counter) Traders
ETF Traders
CFD Traders
Bitcoin Traders
Limited Risk Capital.
Traders with limited capital or who are not ready to risk more capital are now able to trade stock
index futures. These markets will provide liquidity and exposure to the major stock indices and
are accessible to virtually all traders. With the launch of smaller sized Micro E-mini futures, it will
take less upfront investment to enter the market and enjoy the benefits of these markets.
Transitioning from ETFs and Individual Stocks to Futures.
Trading ETFs? Futures offer a capital-efficient alternative to trade equity index benchmarks like
the S&P 500 and Nasdaq-100. Many ETF and equity traders are hesitant to trade the futures
market due to the fear of the unknown. These smaller contracts can help mitigate these fears.
For many, these markets will be a gateway to the classic size (larger) stock index futures markets.
Since there are limitations with simulated trading, participating in these markets will provide a
real live trading experience. Note: there is no interest charged on margin accounts.
Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past
Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Traders that want fractional lot sizes. (e.g. 15 micros = 1.50 E-minis). The Micro E-Minis allow traders to trade fractional sizes. For example, 5 Micro E-Mini S&P 500 = ½ E-mini S&P 500. By establishing a position of 15 Micro E-Mini S&P 500 contracts you are essentially establishing a 1.5 E-mini S&P 500 position. This can be helpful for traders zeroing in on the proper trade size based on their account capitalization and trading methodology. Scaling up an account in this fashion can be beneficial. Because Micro E-mini futures are fully fungible with classic E-mini contracts, you have more flexibility for managing positions as market conditions change, using the contract that best suits your goals. You also have greater access to the liquidity you need. Traders who are new to futures. For traders new to futures, these new markets are excellent starting points for learning about the futures markets, including such unique features as: Using a trading ladder with bids and offers up to 10 ticks deep, instant fills and trade confirmation, marked-to-market open positions, trading around the clock, the responsible use of leverage, and going long or short whenever you like on the turn of a dime. Margins In futures trading, depending on the capital in your account, traders can obtain lower margin requirements than other types of securities. Because of this traders can have a greater level of leverage. The lower the margin, especially Day Trading Margins, the higher the leverage and riskier the trade. Leverage can work for you as well as against you, it magnifies gains as well as losses. Over Night Margins (or performance bonds) are set by the futures exchange. Initial margin is the amount of money you need to have in your account to establish and HOLD a position past the close of any given daily session. This margin is set by the exchange and can change at any time. Day Trade Margins, in many cases, are set by the FCM or brokerage firm. These can be in place for positions that are opened and closed in the SAME trading session. Day trade margins will magnify the risk per capital of a trade. Use day trade margins gingerly and wisely. Day trade margins are also subject to change based on market conditions. Traders experience and account size are also taken into consideration when determining day trading margins. Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Notional Value The Micro’s as “small” but mighty. The range of notional value as of February 18., 2020 for a single Micro contract ranges between $14,684 to $19,480. Note: as the market price changes the notional value changes. The equation is simple, Market Price X Multiplier = Notional Value. The table below outlines the notional value of each of the four stock index futures micro contracts. Notional Value represents the total value of the investment you either bought or sold. Trading Hours Trade Around the Clock Micros are traded electronically on the CME Globex exchange. Hours for the Stock Index Futures are: Sun-Fri: 5:00 p.m. to 4:00 p.m. -23 Hours Mon-Fri: Daily trading halt from 3:15 p.m. to 3:30 p.m. Benefits -Futures market trade nearly around the clock Sunday evening through Friday afternoon. -Take Advantage of after-hours earnings announcements. -Take Advantage of European (non-US hours) trading activity & events. -Turn risk on or off between day and night “sessions”. Because ES futures trade nearly 24 hours a day, you can act on global news and surprise market events as they unfold – adjusting exposure instead of missing out and watching from the sidelines. Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Take advantage of after-hours earnings announcements. According to Kellogg Insight. “the opening bell of the New York Stock Exchange rings at 9:30 a.m. Eastern time, and the closing bell sounds at 4 in the afternoon—yet 95 percent of publicly traded companies announce their quarterly earnings outside of those official hours.” Many companies release earnings after the close. Trading Stock Index futures during these times is just as easy and efficient as trading during regular trading hours. Trading ETF’s and individual equities off hours is difficult and tricky. Take Advantage of European (non-US hours) trading activity & events. There are several major global trading hubs in the world including New York, London, Frankfurt and Tokyo. Traders and investors associated with these hubs have a global investment interests and as such, the US markets are influenced and traded. Turn risk on or off between day and night “sessions” Traders may want to ameliorate their market exposure at night. The futures markets allow a cost effective and efficient way of taking off a trade at the end of the day and getting back into the position the next morning. Special Events Special events can cause mild to significant market volatility. Some special events like the U.S. presidential election are scheduled in advance. Some are scheduled in advance with many twists and turns along the way, like Brexit. And some special events sneak up on you. Do you remember this one in January 2016 “BOJ stuns markets with surprise move to negative interest rates”? The last U.S. presidential election is a great example of a special event. The E-Mini S&P 500 market was responsible for a significant amount of trading, investing and hedging activity the night of that election. Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Factors that affect the Stock Index Markets. Economic Health There are various measures and indicators of economic health. Gross Domestic Product (GDP) is a popular measure. GDP has a significant influence on the direction of the stock market. A rosy GDP could mean that companies will report better earnings. International Relations. Free trade is important to both domestic importers and exporters. Tariff battles, for example, can affect businesses and ultimately profitability. Interest Rates The cost of money, some would argue, is the most important factor related to long term equity prices. Since the Federal Reserve Board (Fed) implemented their low interest rate policy and Quantitative Easing programs, the equity markets have mustered a substantial rally over the last 10 years. And many, as of the date of this writing, think we may have no end in sight. Fear Response Events. Money flows into and out of various markets on a continuous basis. Certain events can cause traders and investors to move money out of risk-based investments and into more conservative investments like US Treasuries and Cash. These events and investor responses can have a quick and immediate effect on equity prices. A good example of this occurred on December 1, 2017, when ABC report Trump/Flynn/Russia connection that that turned out to be untrue – The equity index markets temporarily and abruptly tanked. Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Key Economic Reports Non-Farm Payroll Monthly report showing changes in U.S. jobs. Drives Fed policy and indicates economic growth. Unemployment reports Presents U.S. unemployment rate as percentage. Drives Fed policy and indicates economy’s strength. Earnings releases Lists changes in earnings of publicly traded companies, which can move the market. FOMC Determines U.S. monetary policy and whether to move the key interest rate. Drives stock market movements. Federal Reserve open market operations Indicates the buying and selling of securities by U.S. central banks as a tool of monetary policy. CPI (Consumer Price Index) Measures inflation or cost-of-living changes through an average price of a basket of goods and services. Inventory reports Tracks changes in oil and natural gas supplies. Impacts energy prices paid by consumers. Industrial production Tracks change in monthly raw volume of industrial goods produced. Who Uses Stock Index Markets? Equity index markets are used by a wide range of traders and investors, including portfolio managers, endowments, asset managers, mutual and ETF funds, and self-directed traders. Portfolio Managers Portfolio managers (PMs) are responsible for managing equity market risk for their clients. Equity index futures lend themselves to a variety of risk management strategies to either reduce risk or enhance returns. Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Funds
Endowment, pension and mutual funds generally take a long-term investment view. They may
focus a substantial part of their investments in equity markets to help achieve their long-term
capital growth objectives.
Self-Directed Traders
Self-directed traders can use equity index futures to express a view on the overall equity market.
Rather than having to evaluate individual share values, they can trade the entire index using the
futures contract. Self-directed traders include day, swing and position traders.
Trading Strategies
Outright Bull/Bear directional trades.
Traders may form an opinion on the long-term direction of a market. Their objective is to establish
a position either long or short and hold the position throughout the trend. The chart below is
showing a clear bull channel. If you were short this market, things were good; if long, this market
was good.
Breakout Trades
th
In this example, the market is in a tight trading channel for 13 bars in a row. On the 14 bar the
th
market breaks out of the channel. On a breakout trade, one could buy on the close of the 14 bar on
the expectation that the buyers will jump on board and continue to push market prices higher. A
breakout opportunity could also happen on the bottom of the channel creating a short trade idea.
Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past
Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.Reversion to the point of control.
Since the Micro Mini Stock Index Futures are trading on a regulated exchange, it is easy to
chart the volume of contracts traded at any given price throughout the day.
The chart on the right shows a bell-shaped histogram representing volume. On normal
distribution days, traders will seek to go long or short as the market moves away from the
mode (Point of Control) in the expectation that prices will eventually revert to the mode at
some point during the trading session.
Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past
Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.Retracement Trades Futures markets do not have a tendency to go straight up or straight down. Trends slow down, traders take profits, and temporary fear can set in. This results in volatility and a rocky trajectory. Using retracement levels (e.g., Fibonacci) highlights areas of support and/or resistance, which can be used for entries, exits and stops. In the chart below, a trader may decide to enter a long position once the market trades below the 38.2% retracement level on the assumption that the market will return to a bullish state. History of Stock Index Futures at the CME Key Economic Reports Non-Farm Payroll Monthly report showing changes in U.S. jobs. Drives Fed policy and indicates economic growth. Unemployment reports Presents U.S. unemployment rate as percentage. Drives Fed policy and indicates economy’s strength. Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
Earnings releases Lists changes in earnings of publicly traded companies, which can move the market. FOMC Determines U.S. monetary policy and whether to move the key interest rate. Drives stock market movements. Federal Reserve open market operations Indicates the buying and selling of securities by U.S. central banks as a tool of monetary policy. CPI (Consumer Price Index) Measures inflation or cost-of-living changes through an average price of a basket of goods and services. Inventory reports Tracks changes in oil and natural gas supplies. Impacts energy prices paid by consumers. Industrial production Tracks change in monthly raw volume of industrial goods produced. The Advantages of Trading Nasdaq-100 Futures vs. FANGs (section courtesy of CME Group) FANG stocks, comprised of Facebook, Amazon, Netflix and Google, have been the most talked about stocks in the exciting tech sector. All the FANG members are fast growing, large-cap tech issues that have brought extraordinary gains for investors. By including Apple with the FANGs it is sometimes refer to as FAANGs. FANGs also correlate very highly with the Nasdaq-100 Index, allowing traders to spread or hedge FANGs versus E-mini Nasdaq-100 futures. Correlations are around .85 to .92 over time. The E-mini Nasdaq-100 futures (ticker symbol: NQ) have garnered far more interest and transactional volume. In fact, the critical mass in the Nasdaq-100 futures dwarfs all the FANG stocks together. Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
COMPARING NASDAQ-100 FUTURES WITH FANGS AND NASDAQ-100 ETF Source: CME Group Education Team FIGURE 3: CAPITAL EFFICIENCIES IN E-MINI NASDAQ-100 FUTURES VERSUS FANG STOCKS Figure 3 compares the capital required to purchase $36,000 of each FANG stock. Why $36,000? The notional or dollar amount of the E-mini Nasdaq-100 futures is about $144,000. Consideration must be given to the fact that the FANG stocks trade at vastly differing prices hence, we split each stock into $36,000 increments hence, equaling the value of the futures contract. Now, Reg T margin for stocks stipulates that you put down 50% of the transaction amount and borrow the rest at the broker loan rate. Hence $18,000 per FANG stock times four or $72,000 of capital would be required. Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.
By comparison, to purchase one NQ futures contract a performance bond margin of $5,800 is
required—substantially less than the $72,000 required to purchase the four FANGs on margin.
-https://www.cmegroup.com/education/courses/understanding-the-e-mini-nasdaq-100/e-mini
nasdaq-100-futures-contract-vs-fangs.html
Conclusion
Since their inception the Micro Mini Stock Index Futures have racked up more than 72 million
trades through the end of last year, with a high of 1.4 million contracts in one day.
These new markets should attract new traders from all over the world and should be
considered essential in your trading arsenal.
Trading Futures, Options on Futures involves substantial risk of loss and is not suitable for all investors. Past
Performance is not indicative of future results. © 2020 Infinity Futures, LLC. All Rights Reserved.You can also read
