Less capital intensive than the E-mini Dow Jones futures, the Micro E-mini Dow Jones futures make it easier for traders with little capital to participate in the Dow Jones futures. The contract offers a low-cost entry point for traders looking to gain exposure in U.S. blue-chip stocks.

With over 11.25 million contracts traded in the first 30 days of trading, the micro e-mini futures seemed to have gained popularity right from the start. With the popularity of the Dow Jones Index, the Micro E-mini Dow Jones Futures are one of the most-traded among e-minis.

Micro E-mini Dow Jones Contract Specifications
Symbol
MYM
Exchange
CME
Tick Size
$0.5
Point Value
$5
Contract Size
5 x Dow Jones Index
Contract Months
March, June, September & December
Trading Hours
Sun - Fri 6:00 pm – 5:00 pm ET
Settlement
Financially settled
Last Trading Day
Third Friday of the contract month.

What is the Dow Jones Index?

The Dow Jones Index, often called the Dow Jones Industrial Average (DJIA) or simply the Dow, is a  U.S. stock market index. It measures the performance of 30 blue-chip companies listed on the New York Stock Exchange (NYSE) and the NASDAQ. Being a price-weighted index, component stocks with higher share prices are given a greater weighting.

It is the second-oldest U.S. market index after the Dow Jones Transportation Average and, certainly, one of the most-watched indexes in the world. The DJIA was first calculated in May 1896 by Charles Dow and Edward Jones, and the index was named after them.

The index is presently calculated and maintained by S&P Dow Jones Indices LLB. Despite the DJIA’s popularity, investors only see it as an index of blue-chip companies in the US and not a true broad market index.

What are Micro E-mini Dow Jones futures?

The Micro E-mini Dow Jones futures are a type of electronically traded Dow Jones Index futures whose value is one-tenth of the E-mini Dow Jones futures. As with the E-mini Dow Jones futures, they are equity index futures in which the underlying asset is the Dow Jones Index.

Launched on May 6, 2019, on the Chicago Merantile Exchange Globex platform, the Micro E-mini Dow Jones futures were created to offer small traders exposure to the Dow Jones Index futures at a much lower cost than the already existing e-mini futures contracts. The contracts are financially settled.

Micro contracts are also leveraged, so a trader only needs to deposit a portion of the total worth of the contract, known as the margin, to be able to trade the contract. The margin required to maintain one contract of the Micro E-mini Dow Jones futures is just $550.

The contract is marked to market, so at the end of every trading day, the clearinghouse of the exchange credit/debit the traders’ accounts with the profits or losses made on that day. Traders whose accounts are falling below the maintenance margin are required to top up their accounts to be able to keep their contracts.

All that is needed to trade the contract is to create an account with the exchange through a futures broker and deposit the required margin. Be cautious about futures trading though — while you can easily make money, you can also lose more than you invested.

Why trade Micro E-mini Dow Jones futures

Why trade Micro E-mini Dow Jones futures

Why trade Micro E-mini Dow Jones futures

The reasons for trading the Micro E-mini Dow Jones futures are many, and they include the following:

Hedging: Individual investors can use the Micro E-mini Dow Jones futures to hedge their exposure in the U.S. stock market, especially for blue-chip stocks.

Portfolio diversification: Small investors can use the contract to gain exposure to U.S. blue-chip stocks as it represents a diversified stock portfolio at a lower cost.

Speculation: The majority of the traders in the futures market are there for speculative reasons, and the Micro E-mini Dow Jones futures have good liquidity and volatility for speculative trading.

The benefits of Micro E-mini Dow Jones contracts over the mini version

Compared to the E-mini contracts, these are some of the benefits of trading the Micro E-mini Dow Jones contracts:

Capital efficiency: The maintenance margin required for carrying the Micro E-mini Dow Jones futures contract is $550 compared to the $5,500 required for the E-mini Dow Jones futures. In addition, the tick value for the micro contract is much lower.

Ease of diversification: The contracts are less capital intensive, so traders may have spare cash to trade other assets at the same time.

Emotional control: Emotional control is very important in trading and is often dependent on the amount at risk. The lower margins and tick size involved in micro contracts helps traders to manage their emotions better, especially when carrying overnight trades.

How does the Micro E-mini Dow Jones futures trade?

How does the Micro E-mini Dow Jones futures trade?

How does the Micro E-mini Dow Jones futures trade?

The Micro E-mini Dow Jones futures are offered on the Chicago Mercantile Exchange (CME) Group’s Globex electronic trading platform. Trading is open Sunday to Friday from 6:00 p.m. to 5:00 p.m ET the next day.

One contract of Dow Jones E-mini futures (MYM) settles for $0.50 times the current value of the Dow Jones Index. The minimum price fluctuation is 1.00 index point, which is equal to $0.50 per contract. There are quarterly contracts (March, June, September, and December) listed for four consecutive quarters.

At expiration, the contract is settled with cash. The last trading day is the third Friday of the contract month, and trading terminates at 9:30 a.m. ET.

Micro E-mini Dow Jones Trading Strategies

Trading Strategy

Trading Strategy

Many of those who choose to trade the micro futures contracts, do so because they lack the capital that’s required to trade the bigger contracts. 

Some of the best trading strategy types that work well in market indexes and equities, are mean reversion strategies. These are trading strategies that attempt to catch pullbacks in the market, and profit from the reversal of the short term trend that tends to follow. 

Breakout trading strategies also tend to do quite well in these markets, if the right setups are used. 

If you like to get inspiration for your own trading strategies, we really recommend that you take a closer look at our edge membership. As a member you get new, fresh edges delivered right to your inbox each month!

 

The factors that affect Micro E-mini Dow Jones futures

Many factors can directly or indirectly affect the Micro E-mini Dow Jones futures:

Movement of the component stocks: Being a price-weighted index, the price movement of highly priced stocks tends to have more effects on the index than the lower-priced component stocks.

Trade policies: Changes in trade policies can affect stock prices, which, in turn, affects the index and the futures contract.

Political events: Geopolitical events, such as wars, elections, and referendums, can also affect stock prices and move the Dow Jones Index.

Interest rate changes: Changes in the Fed’s rates can have huge effects on stock prices and the value of the Dow.

Value of the U.S. dollars: A falling USD may drive stock prices up, causing the Dow to rise, while a rising USD can have the opposite effect on the Dow.

Conclusion

The Micro E-mini Dow Jones futures provide small traders with a cheap way to speculate on the direction of the DJIA. It also offers investors a way to hedge their exposure in blue-chip U.S. stocks. The contract can be traded on the CME’s Globex trading platform.

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