There are many quality futures markets around the world. We trade most of the big ones at Online Trading Academy. However, the most popular futures markets are the Equity index futures. While they all move in the same direction, there are differences in them that allow traders to match these markets to their personalities. Below is some information in hopes that you will make the safe and beneficial choice should you ever decide to trade these markets.
What are the Equity index Futures?
Equity index futures are designed to trade in relation to a specific equity index which are comprised of a basket of securities. These products allow traders to participate in a basket of equities without having to purchase to full margin value of single equity securities.
Why Equity index Futures?
The following is a unique combination of features that offers retail and institution fantastic opportunity:
- Lower Capital Gains Tax
- Advantages of Stocks & Mutual funds combined
- Lower Margin costs
- Low Commissions
- Very Liquid Investments
- Strong Volume
- Near 24-Hour Trading (except for a 15 minute break for settlement)
- Hedging Portfolio Risk
- Portfolio Diversification
- Most popular
- Highest volume / Most liquid
- $50.00 per point per contract (Example: If you buy 1 S&P Emini Futures contract at 1205.00 and sell it at 1210.00, you made $250.00)
- Represents a basket of stocks (S&P 500)
- Very orderly market because of its high volume
- Ideal for the more conservative trader
- Solid volume
- $20.00 per point per contract
- Represents a basket of NASDAQ stocks
- Orderly market but much larger swings partly because of lower volume than the S&P
- Lower volume which means large swings in price, very volatile
- $5.00 per point per contract but don’t let that fool you, it is volatile
- Represents a basket of Dow stocks
- Because of low volume, you may consider doing your analysis for this market on the S&P chart
- Lower volume
- Popular because of its price point and lower volume, this is not a market for conservative personalities.
- $100.00 per point per contract
- Represents a basket of Russell stocks
- The combination of low volume and the high price point means a big money, fast moving market (not for the beginner)
- Similar to the Russell
- Lower volume
- Traded on the Eurex Exchange
- 25.00 Euro’s per full point, per contract
- This market can really move so beginners beware
- One of my favorites
- Saving one of the best for last…
- High volume on a 100% electronic exchange (Eurex)
- 10.00 Euro’s per point, per contract
- This is a great market to trade
For more information on these and other futures markets, see the following websites:
Once you have an idea where prices are going in a market and desire to place a trade or investment to take advantage of that move, the next question is this: What trading/investment vehicle offers me the lowest risk, lowest capital requirement, highest reward, and so on… In the world of equities, there are MANY different ways to take advantage of a move in the market. Knowing the details of the different markets helps you make the best decision based on your individual goals and requirements.
Hope this was helpful, have a great day.