January 23

Micro E-mini Futures (Symbol, Margin & Commission) – Trading Strategies and Seasonality (How to Trade)

Last Updated on 23 January, 2023 by Samuelsson

Micro E-mini futures

Micro E-mini futures market have 1/10th the size of the classic E-mini futures. Micro E-mini futures make it easier for traders with smaller accounts to discover the benefits of trading futures.

Micro E- mini Symbols- Contract Specifications

CME has created micro futures contracts for four of the most commonly traded index markets. Here they are all listed:

(Don’t know what ticks or points are? Then you may read our article on futures.)

Micro E-mini S&P 500

Contract size (point size):  $5

Tick size: $0.5

Symbol name: MES

Parent Symbol name: ES

Micro E-mini Nasdaq 100

Contract size (point size):  $5

Tick size: $0.5

Symbol name: MNQ

Parent Symbol name: NQ

Micro E-mini Russel 2000

Contract size (point size):  $2

Tick size: $0.2

Symbol name: M2k

Parent Symbol name: RTY

Micro E-mini DOW

Contract size (point size):  $5

Tick size: $0.5

Symbol name: MYM

Parent Symbol name: YM

Micro E-mini Futures (Symbol, Margin & Commission) - Trading Strategies and Seasonality (How to Trade)

Margin And Commission

The Commission and margin varies by broker. Below we have listed some examples of the commission that some brokers charge:

Tradestation: $0.50

TD Ameritrade: $2.25

Tastyworks: $0.85

Interactive Brokers: $0.32-0.47, depending on trading volume

E*TRADE: $1.50

When it comes to the margin, it varies with time. The easiest way to find the margin for any of the micro futures contracts mentioned in this article is by going to the website of the exchange, choosing the futures contract of interest, and then clicking on “margin”.

Keep in mind that some brokers may require a larger amount in margin than what is set by the exchange.

Micro E-mini futures
Micro E-mini futures

How Much Capital Do I Need to Trade Micro E-mini futures?

Depending on the strategy and type of trading, you may begin with as little as $1000. Still, it’s recommended to start with a little more to have room for unexpected events.

Many of those who are new to trading begin with a small capital. Often, it might only be a couple of thousand dollars. For those traders, futures have not been an alternative. Even the e-mini futures, that were made to make futures more accessible to traders with smaller accounts, often are too large.

This is where micro e-mini futures comes to their rescue. Launched by CME in 2019, micro e-mini futures aim to cut the capital threshold and allow smaller retail traders to enter the micro e-mini futures markets.

For example, many daytrading strategies in the ES (S&P 500) contract require a stop loss of a few thousand dollars. For a trader with a capital of 2000$ dollars, it would mean that risk is high beyond any sensible limits. These traders have often had to resort to other instruments, such as exchange-traded fund, that provide lower share/contract sizes.

With the advent of these new micro e-mini futures contracts, low capitalized traders can now reap the benefits of the futures markets, such as near 24/7 markets and comparably high liquidity both during the night and day sessions.

Benefits of Micro futures

  1. With e-micro futures, you will be able to participate both in the night and day session. Did you forget to sell at close? No problem! Just wait for the market to reopen half an hour or so later!
  2. The current e-mini contracts have high volatility, which helps to reduce slippage.  The Micro- Emini contracts will most likely soon develop to trade at as high, or even higher volumes!
  3. Micro futures don’t require as much capital as traditional futures contracts which makes them more available to traders with little capital.

Disadvantages

Some of the major disadvantages have been that futures markets require much capital. That main drawback is now erased!

Trading Strategies for Micro E-mini Futures

Typically, trading strategies that work on the full-size contracts should also work with the e-mini micro contracts. Our edge library is a good start to find promising edges to trade on the micro futures markets!

Previously, as with the DAX futures contract, which is massive, there are sometimes some issues with converting strategies from the full-size contract. Hopefully, this will not at all be an issue with the new micro e-mini contracts.

1. Bullish Momentum Trading: This strategy involves buying a Micro E-mini futures contract when the price is trending higher and selling when the price is trending lower. Traders can look for price patterns such as a higher high, higher low, and higher close to enter a bullish momentum trade.

2. Mean Reversion Trading: Mean reversion is a trading strategy where traders look for the price of a Micro E-mini futures contract to revert back to its mean or average price. Traders can identify the mean or average price of the instrument by tracking the moving average of the instrument. When the price of the instrument moves away from its mean, traders can enter a mean reversion trade by buying when the price is below the mean and selling when the price is above the mean.

3. Breakout Trading: Breakout trading is a trading strategy where traders look for the price of a Micro E-mini futures contract to break out of a range or previous highs or lows. Traders can enter a breakout trade by buying when the price breaks out above the range or previous highs and selling when the price breaks out below the range or previous lows.

4. Scalping: Scalping is a trading strategy where traders look to take small profits by taking advantage of the minor price movements in the market. Traders can enter scalping trades by buying when the price is trending higher and selling when the price is trending lower.

Micro E-mini Futures (Symbol, Margin & Commission) - Trading Strategies and Seasonality (How to Trade)

Interesting statistics about Micro E-mini futures

1. Micro E-mini futures are the smallest and most liquid contracts in the equity index futures market, with a tick size of 0.25.

2. The Micro E-mini futures began trading in May 2019.

3. The Micro E-mini contracts are one-tenth the size of the standard E-mini contracts.

4. Micro E-mini futures are available on the S&P 500, Nasdaq-100, Dow Jones Industrial Average, and Russell 2000.

5. Micro E-mini futures are traded on the CME Globex platform, the same platform that is used to trade standard E-mini contracts.

6. The Micro E-mini futures have a margin requirement of 5%, which is much lower than the margin requirement for standard E-mini contracts.

7. The average daily volume for the Micro E-mini S&P 500 futures is more than 5.5 million contracts.

8. Since their introduction, the Micro E-mini futures have become the most actively traded equity index futures contracts.

9. The Micro E-mini futures are the most popular choice among day traders.

10. Micro E-mini futures offer investors the ability to trade the equity markets with lower capital requirements.

11. The Micro E-mini futures have helped to increase liquidity in the equity index futures market.

12. The Micro E-mini futures have revolutionized the way traders and investors access the equity markets.

FAQ

Q1: What are Micro E-mini futures?

A1: Micro E-mini futures are futures contracts that are one-tenth the size of the standard E-mini futures contracts. These mini futures contracts provide traders with a cost-effective way to gain exposure to the stock market without the large capital requirements associated with standard E-mini futures contracts. Micro E-mini futures are available on the S&P 500, Nasdaq 100, Russell 2000, and Dow Jones Industrial Average indices.

Q2: Who can trade Micro E-mini futures?

A2: Micro E-mini futures are available to traders of all levels, including retail traders and institutional investors. These mini futures contracts are easily accessible on many online trading platforms.

Q3: How are Micro E-mini futures priced?

A3: Micro E-mini futures are priced in relation to the underlying index. They are traded in one-tenth increments of the full-sized E-mini contracts.

Q4: What are the advantages of trading Micro E-mini futures?

A4: The main advantages of trading Micro E-mini futures include lower capital requirements, lower risk, and the ability to take advantage of short-term price movements with less capital.

Q5: What are the risks associated with trading Micro E-mini futures?

A5: As with any form of trading, there are risks associated with trading Micro E-mini futures. These include market risk, liquidity risk, and leverage risk.

Q6: How do I get started trading Micro E-mini futures?

A6: Before trading Micro E-mini futures, it is important to understand the risks associated with trading and to develop strategies that can be used to limit those risks. It is also important to understand the trading platform and to practice trading with a demo account to ensure that you are comfortable with the process before trading with real money.

Q7: What are the fees associated with trading Micro E-mini futures?

A7: The fees associated with trading Micro E-mini futures vary depending on the broker. Generally, there are commissions and exchange fees that must be paid when trading these mini futures contracts.

Q8: What other markets can I trade with Micro E-mini futures?

A8: Micro E-mini futures are available for the S&P 500, Nasdaq 100, Russell 2000, and Dow Jones Industrial Average indices.

Q9: What are the margin requirements for trading Micro E-mini futures?

A9: Margin requirements for trading Micro E-mini futures vary depending on the broker. Generally, the margin requirement is less than the margin requirement for a full-sized E-mini contract.

Q10: Are there any special tax considerations when trading Micro E-mini futures?

A10: Yes, there are special tax considerations when trading Micro E-mini futures. It is important to speak to a tax advisor to discuss the specific tax implications of trading these mini futures contracts.

Seasonality Micro E-mini Futures

Micro E-mini futures are contracts that allow traders to speculate on the price movements of the underlying asset. These contracts are based on the same underlying index as larger E-mini futures but are a fraction of the size, allowing for greater flexibility and lower risk. Seasonality is a powerful tool for traders as it allows them to better understand the underlying asset’s historical performance, anticipate future price movements and make more profitable trades.

Micro E-mini futures display a monthly seasonality pattern and it is important to understand the market conditions in each month to take advantage of the seasonal trends.

January: Volatility is typically high in January as traders and investors adjust their portfolios to the new year.

February: The market tends to be quiet in February, with low volatility and low volume.

March: Market volatility typically increases in March as traders adjust their portfolios for the spring.

April: Volatility often declines in April as the spring market winds down.

May: Market volatility increases again in May as traders prepare for the summer months.

June: Volatility generally declines in June as the summer months approach.

July: Market volatility can be high in July as traders adjust their portfolios for the summer months.

August: Volatility generally decreases in August as summer trading winds down.

September: Volatility typically increases in September as traders adjust their portfolios for the fall.

October: Market volatility tends to be high in October as traders prepare for the upcoming winter months.

November: Volatility usually decreases in November as traders adjust their portfolios for the winter months.

December: Volatility is typically high in December as traders adjust their portfolios for the end of the year.

Conclusion

Micro E-mini futures are a type of derivative instrument that provide investors with the opportunity to gain exposure to the price movements of a wide range of underlying assets such as stocks, indices, commodities, and currencies. These futures are a type of contract based on an underlying asset, and they allow investors to speculate on the future price movements of that asset.

Micro E-mini futures are a variation on traditional futures contracts, but they are smaller in size. For example, rather than trading a full-size S&P 500 futures contract, investors can buy or sell a Micro E-mini S&P 500 contract at a fraction of the size. In other words, the dollar value of each contract is much smaller than a traditional futures contract, making it more affordable and accessible to individual investors.

The smaller size of Micro E-mini contracts means that investors can access the same underlying asset with a lower financial commitment. This makes them more accessible to smaller investors who may not have the capital to invest in a full-size futures contract. Additionally, because the contracts are smaller, they are more liquid and can be traded more quickly and easily.

The prospect of lower commissions is also an attractive feature of Micro E-mini futures. Because these contracts are smaller in size, the cost of each transaction is lower than with full-size futures. This helps make them an attractive option for investors who are looking to trade frequently or those who may have limited capital.

Overall, Micro E-mini futures offer investors the opportunity to gain exposure to the price movements of a wide range of underlying assets at a fraction of the cost of a traditional futures contract. They are also more liquid and easier to trade, making them an attractive option for individual investors.

The advent of e-micro futures contracts is welcomed by many traders who previously have been excluded from the e-mini index futures markets due to the high capital requirements. Hopefully, micro e-mini futures will help to popularize futures and bring a good concept to the larger masses.

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


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