January 23

Euro Stoxx 50 Futures – Trading Strategies | Symbols and Contract Specifications

Last Updated on 23 January, 2023 by Samuelsson

The Euro Stoxx 50 Futures Trading is an exchange-traded contract developed by the European Central Bank (ECB). It is a financial instrument that tracks the performance of the Euro Stoxx 50 Index, which is a price-weighted index of the 50 largest blue-chip companies in the Eurozone. The Euro Stoxx 50 Futures Trading is a popular choice for investors looking to gain exposure to the European markets in an efficient and cost-effective way. It is a liquid and tradable instrument that provides an opportunity to benefit from the performance of the Euro Stoxx 50 Index without having to purchase the underlying stocks. This instrument can be used by investors to hedge against currency risk, diversify their portfolios, or take advantage of arbitrage opportunities.

The Euro Stox 50 futures market tracks the Euro Stox 50 index market, which is a market index consisting of 50 European Blue Chip Companies. The Index was introduced in 1998, and the futures contract came

Euro Stoxx 50 Futures Contract Specifications

Symbol:  FESX

Point Size: €10

Minimum Price Fluctuation: €10

Trading Hours: 7: 50 am -8:00 pm CET

Expiration Months: March, June, September, and December

Rollover takes place on the third friday of the contract month

Euro Stoxx 50 Futures – Trading Strategies | Symbols and Contract Specifications

Advantages of FESX Futures

The same advantages that apply to other futures contracts, also apply to the FESX futures market. Here are some advantages of futures:

Low Costs – Since the FESX futures offer great leverage, the trading costs relative to the market exposure you get is are tiny

Long History – The Stoxx 50 index which was created in 1998 now has more than 20 years of history. In combination with the fact that the Stoxx 50 is a market index consisting of blue-chip stocks, the FESX futures become an attractive gateway to the Stoxx 50 market.

Hang Seng
Euro Stoxx 50 Futures

The Stoxx 50 Index Market

The Stoxx 50 Index market consists of the fifty largest and most liquid stocks in Europe. The goal of the Stoxx 50 index was “to provide a blue-chip representation of Supersector leaders in the Eurozone”. The Index is reviewed in September every year

Composition of the Stoxx 50 Index

Reasons to Trade Euro Stoxx 50 Futures

The Stoxx 50 is an index consisting of blue-chip stocks which are some of the most stable and liquid companies in Europe. Therefore the Stoxx 50 offers exposure to some of the best and most stable companies in Europe, which makes the Stoxx 50 a safe investment.

Liquidity

The Euro Stoxx 50 futures contract (FESX)  that trades on Eurex is very liquid, which decreases slippage, in turn leaving more of the profit for the trader.

 

High Leverage

With futures, you have inbuilt leverage, which means that you can profit greatly from even small moves in the market.

Low Costs

Since futures work with leverage, the cost of commissions and fees relative to the market exposure becomes tiny

You May Go Short

With futures contracts, you can sell short and profit from downwards movements in the market.

You can read more about the benefits of trading futures in our post on the topic.

Trading Strategies Euro Stoxx 50 Futures

Every market has its own special characteristics, but there are some traits that can be observed in many markets. One such logic that is prevalent among market indexes, is mean reversion.

Mean reversion is the tendency of a market to revert to its mean, once it has made exaggerated moves in one direction. So, if the market has moved excessively to the downside, we may soon expect it to turn around. The mean-reverting tendency of index markets is best used to go long by catching a falling market, due to the long-term rising trend of the equity markets.

1. Momentum Trading: This strategy involves buying futures contracts when prices are rising, and selling them when prices are falling. The goal is to capitalize on short-term price movements in the market. Traders typically use technical analysis to identify trading opportunities and may use indicators such as the Relative Strength Index (RSI) and moving averages to help them determine when to enter and exit trades.

2. Contrarian Investing: This strategy involves taking an opposite position to the majority of market participants. For example, if the majority of investors are bearish on Euro Stoxx 50 futures, a contrarian investor would take a bullish position. This strategy works best in volatile markets when there is a lot of uncertainty.

3. Swing Trading: This strategy involves taking trades over a short period of time, typically a few days to a few weeks. Swing traders often use technical analysis to identify trading opportunities and may use indicators such as the moving average convergence divergence (MACD) to help them determine when to enter and exit trades.

4. Trend Following: This strategy involves taking trades in the same direction as the overall market trend. Traders using this strategy typically use technical analysis to identify trading opportunities and may use indicators such as the moving average convergence divergence (MACD) to help them determine when to enter and exit trades.

5. Arbitrage: This strategy involves taking advantage of price discrepancies in the Euro Stoxx 50 futures market. Traders typically use technical analysis to identify trading opportunities and may use indicators such as the moving average convergence divergence (MACD) to help them determine when to enter and exit trades.

Where to Find Price Data

For traders who just want to view the chart of the Euro Stoxx 50 Futures market, they can do so here.

Traders who wish to import data into their trading platform will have to sign up for an external data feed. E-signal is one data provider for the Euro Stoxx 50 Futures markets.

Euro Stoxx 50 Futures – Trading Strategies | Symbols and Contract Specifications

Where to Trade Euro Stoxx 50 Futures

Not all brokers offer Asian or even European markets.

However, Interactive Brokers (IB) does, and Euro Stoxx 50 futures can be traded through them. IB is known for its low commissions and is a reliable broker in the trading industry.

Seasonality of Euro Stoxx 50 Futures Trading.

The Euro Stoxx 50 futures contract is a futures contract on the Euro Stoxx 50 stock index. The futures contract is traded on the EUREX exchange and is a popular instrument for hedging and speculating on the European stock market.

Seasonality of Euro Stoxx 50 Futures Trading:

January: Market tends to be volatile due to investors readjusting portfolios after the holidays.

February: Activity tends to slow down due to lack of corporate news.

March: Activity picks up, as investors prepare for the upcoming earnings season.

April: Activity increases as earnings season begins.

May: Activity remains steady as earnings season continues.

June: Activity tends to slow down as investors wait for the summer months.

July: Activity tends to remain slow, as investors take holidays and wait for the influx of August trading.

August: Activity increases as investors return from holidays and take positions for the upcoming earnings season.

September: Activity increases as earnings season begins.

October: Activity remains steady as earnings season continues.

November: Activity tends to remain steady as investors adjust positions for the upcoming year.

December: Activity tends to slow down as investors take holidays and wait for the influx of January trading.

Interesting statstics about Euro Stoxx 50 Futures

1. The Euro Stoxx 50 Index is one of the most widely traded stock indices in Europe, representing 50 of the largest and most liquid stocks in the Eurozone.

2. The Euro Stoxx 50 Futures contract has an average daily volume of over one million contracts.

3. The Euro Stoxx 50 Futures contract is the most actively traded stock index futures contract in Europe.

4. The Euro Stoxx 50 Futures contract is traded on the Eurex exchange in Germany.

5. The Euro Stoxx 50 Futures contract has a minimum price fluctuation of 0.5 points, or €12.50 per contract.

6. The Euro Stoxx 50 Futures contract has a contract size of €50 times the value of the Euro Stoxx 50 Index.

7. The Euro Stoxx 50 Futures contract has an expiry date of the third Friday of the contract month, with a last trading day of the second Friday.

8. The Euro Stoxx 50 Futures contract is cash-settled, meaning no physical delivery of stocks is required at the expiration of the contract.

9. The Euro Stoxx 50 Futures contract is a European style index option, meaning it can only be exercised on the expiration date.

10. The Euro Stoxx 50 Futures contract is an exchange-traded fund, meaning it is publicly traded and can be bought and sold on the open market.

11. The Euro Stoxx 50 Futures contract is a leveraged investment, meaning investors can take a large position with a smaller amount of capital.

12. The Euro Stoxx 50 Futures contract is a popular hedging instrument for investors looking to protect against downside risk in the stock markets.

FAQ

Q1: What is the Euro Stoxx 50 Futures?

A1: The Euro Stoxx 50 Futures is a futures contract that tracks the performance of the Euro Stoxx 50 Index, which is a stock market index of the 50 largest and most liquid European stocks. The contract is traded on the Eurex Exchange in Frankfurt, Germany. It is a financial derivative used by traders to hedge against or speculate on the direction of the Euro Stoxx 50 Index.

Q2: How does the Euro Stoxx 50 Futures work?

A2: The Euro Stoxx 50 Futures contract is a futures contract between two parties that agrees to buy or sell a certain amount of the Euro Stoxx 50 Index at a predetermined price on a specified future date. The contract is traded on the Eurex Exchange and is settled in cash. The contract is marked to market on a daily basis, meaning that any change in the value of the contract is accounted for each day.

Q3: What are the advantages of trading Euro Stoxx 50 Futures?

A3: There are several advantages of trading Euro Stoxx 50 Futures. These include: reduced risk due to the hedging opportunities provided by the futures contract; the ability to take advantage of price movements in the Euro Stoxx 50 Index without the need to purchase the underlying stocks; and access to a large and highly liquid market with relatively low trading costs.

Q4: What are the risks associated with trading Euro Stoxx 50 Futures?

A4: As with any financial product, there are certain risks associated with trading Euro Stoxx 50 Futures. These include the risk of market volatility, counterparty default, and margin calls. It is important to understand these risks and take appropriate steps to manage them.

Q5: Who are the participants in the Euro Stoxx 50 Futures market?

A5: The participants in the Euro Stoxx 50 Futures market include institutional investors, hedge funds, banks, and other financial institutions. Each of these participants trades for their own account or for their clients.

Q6: What is the margin requirement for trading Euro Stoxx 50 Futures?

A6: The margin requirement for trading Euro Stoxx 50 Futures is determined by the Eurex Exchange and is subject to change. Generally, the margin requirement is 5-10% of the total contract value.

Q7: How is the Euro Stoxx 50 Futures contract priced?

A7: The Euro Stoxx 50 Futures contract is priced based on the current index value plus a premium or discount. The premium or discount is determined by the demand and supply of the contract.

Q8: What are the trading hours for Euro Stoxx 50 Futures?

A8: The trading hours for Euro Stoxx 50 Futures are from 8:00 am to 5:00 pm CET (Central European Time) Monday through Friday.

Q9: Can I trade Euro Stoxx 50 Futures on margin?

A9: Yes, you can trade Euro Stoxx 50 Futures on margin. The margin requirement is determined by the Eurex Exchange and is subject to change.

Q10: What are the fees associated with trading Euro Stoxx 50 Futures?

A10: The fees associated with trading Euro Stoxx 50 Futures vary depending on the broker. Generally, there are commissions, exchange fees, and other fees associated with trading. It is important to check with your broker before trading to understand the fees associated with trading Euro Stoxx 50 Futures.

Here is our archive with articles about other tradeable futures markets.

Summary

Euro Stoxx 50 Futures are futures contracts that track the Euro Stoxx 50 Index, an index that tracks the performance of the fifty largest companies in the eurozone. The Euro Stoxx 50 represents the largest and most liquid stocks in the eurozone and provides investors with an excellent way to gain exposure to the eurozone economy.

The Euro Stoxx 50 futures contract is a futures contract that is traded on the Eurex exchange. The contract has a face value of €10 per point and is settled in cash. The contract is traded in Euros and is priced in Euros per point. The contract is the most actively traded index futures contract on the Eurex exchange.

The Euro Stoxx 50 futures contract is based on the Euro Stoxx 50 index, which is a price-weighted index that tracks the performance of the fifty largest companies in the eurozone. The index is designed to provide investors with a way to gain exposure to the eurozone economy. The index is composed of a variety of sub-sectors, including financials, consumer staples, energy, and materials.

The Euro Stoxx 50 futures contract has a number of benefits for traders. It provides a way for investors to gain exposure to the eurozone economy without having to own the underlying stocks. It also provides a way for investors to hedge their exposure to the eurozone economy in the event of a downturn. Additionally, the contract provides traders with a way to speculate on the direction of the Euro Stoxx 50 index.

The Euro Stoxx 50 futures contract is a good choice for investors who want to gain exposure to the eurozone economy. It provides a way for investors to gain exposure to the eurozone economy without having to own the underlying stocks and provides a way to hedge their exposure to the eurozone economy in the event of a downturn. Additionally, the contract provides traders with a way to speculate on the direction of the Euro Stoxx 50 index.


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