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Micro E-mini S&P 500 Index Futures (MES) Trading Strategies | Symbols and Contract Specifications

Last Updated on 10 February, 2024 by Abrahamtolle

Micro Emini S&P 500 Index Futures (MES) are a relatively new addition to the financial markets. They are a smaller version of the popular S&P 500 index futures contracts, which allow traders to speculate on the direction of the index. MES have become popular due to their high liquidity and low cost, which makes them an attractive option for traders looking to gain exposure to the S&P 500. This article will explore the trading strategies available for MES, their symbols and contract specifications, and some of the key points to consider when trading them.

The popularity of the S&P 500 Index futures market and the demand for small contract sizes led to the creation of the e-mini and micro e-mini contracts, which can be accessible to all traders. These contracts are electronically traded. The Micro E-mini S&P 500 Index futures offer a lot of advantages and appeal to traders of all experience levels.

 

Micro E-mini S&P 500 Index Futures (MES) Symbols and Contract Specifications

Micro E-mini S&P 500 Index Futures (MES) Symbols and Contract Specifications

  1. Symbol: MES
  2. Underlying Asset: S&P 500 Index
  3. Exchange: CME Group
  4. Contract Size: 1/5 of the S&P 500 Index
  5. Tick Size: 0.25 Index Points
  6. Point Value: $12.50
  7. Trading Hours: Sunday to Friday 6:00pm to 5:00pm (Central Time)
  8. Trading Months: Mar, Jun, Sep, Dec
  9. Last Trading Day: Third Friday of the expiration month
  10. Delivery: Physical delivery not available, cash-settled
  11. Initial Margin: $500 per contract
  12. Maintenance Margin: $450 per contract
  13. Minimum Price Fluctuation: 0.25 Index Points
  14. Daily Price Limit: 2% above or below the previous day’s close
  15. Expiration Date: Third Friday of the expiration month
  16. Settlement Method: Cash settlement based on the Special Opening Quotation (SOQ) of the S&P 500 Index
  17. Position Limits: 4,500 contracts
  18. Electronic Trading: Available on CME Direct and other trading platforms
  19. Daily Trading Volume: Average daily volume of over 1 million contracts
  20. Order Types: Market, Limit, Stop, Stop-Limit, Iceberg
  21. Clearing: Cleared through CME Clearing
  22. Fees: Exchange and Clearing fees apply
  23. Leverage: 5 to 1 based on initial margin requirements
  24. Margin Calculations: Daily mark-to-market margin calculation
  25. Risk Management: Automated risk management tools available for traders.

Trading Strategies

Just like other equity index futures, the Micro E-mini S&P 500 Index futures are financially settled, so traders won’t have to worry about the physical delivery of the product at expiration. Being a derivative of a well-known index, the Micro E-mini S&P 500 Index futures is becoming one of the favorite contracts for active futures traders.

What is the S&P 500 Index?

The S&P 500 Index is a market-capitalization-weighted index of the U.S. stock market that includes the 500 largest publicly traded companies in the U.S. market. It is one of the most commonly followed equity indexes and is usually seen as the benchmark of the U.S. stock market.

The index was first calculated by the Standard Statistics Company in 1926 as a 90-stock index and later renamed the Standard and Poor’s Index when Poor’s Publishing merged with Standard Statistics Company to form Standard & Poor’s in 1941. In March 1957, it was expanded to its current 500 number to become the S&P 500 Index. At present, the index is published and maintained by the S&P Dow Jones Indices LLC.

There are many financial products that track the S&P 500 Index, such as index funds, exchange-traded funds, and futures contracts, including the E-mini S&P 500 futures and, recently, the Micro E-mini S&P 500 Index futures.

What is Micro E-mini S&P 500 Index futures?

S&P-500 Micro E-mini Futures
S&P-500 Micro E-mini Futures

Futures are financial derivative contracts that obligate the buyer to purchase, and the seller to sell, the underlying asset, such as a physical commodity or a financial instrument, at a predetermined future date and price. In the case of the S&P 500 futures, the underlying asset is the S&P 500 Index, but the contract is financially settled.

Just like the E-mini S&P 500 futures, the Micro E-mini S&P 500 Index futures are a type of the S&P 500 futures which trade only on the Globex electronic trading platform. They are worth 1/50 of the value of the standard S&P 500 futures contract or 1/10 of the value of the E-mini S&P 500 futures. So, the ‘micro’ stands for a fraction of the E-mini contract.

The Micro E-mini S&P 500 Index futures were launched on May 6, 2019, on the Chicago Mercantile Exchange Globex platform to offer small traders exposure to the S&P 500 Index futures at a much lower cost than the already existing e-mini futures contracts. Since its launch, the contract has been quite popular among traders, recording a sizeable trading volume on a daily basis.

Why trade the S&P 500 Index futures

These are the different reasons for trading the Micro E-mini S&P 500 Index futures:

Portfolio diversification: Portfolio diversification is a way investors spread their capital across many stocks to reduce their risk exposure. The Micro E-mini S&P 500 Index futures present a cheap way to invest in an already diversified stock derivative product.

Speculation: The majority of the traders in the futures market are there for speculative reasons, and the Micro E-mini S&P 500 Index futures makes it easy for small investors to get involved in the party.

Hedging: The Micro E-mini S&P 500 index futures are designed to manage exposure to the 500 U.S. large-cap stocks tracked by the S&P 500 index. Thus, retail investors can use it to hedge their exposure in the U.S. stock market.

The benefits of Micro E-mini contracts over the mini and standard contracts

The Micro E-mini S&P 500 Index futures have some benefits when compared with the E-mini and the standard contracts. These are some of them:

Capital efficiency: This is the relationship between invested capital and returns. The maintenance margin required for carrying the Micro E-mini S&P 500 Index futures contract is $660 compared to the $6,600 required for the E-mini S&P 500 Index futures. Similarly, the tick value is much lower.

Ease of diversification: Since the contracts are less capital intensive, traders may have spare cash to trade many different assets at the same time.

Emotional control: For most traders, their emotional control is 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 S&P 500 Index futures trade?

The Micro E-mini S&P 500 Index futures are offered on the Chicago Mercantile Exchange (CME) Group’s Globex electronic trading platform. The market is open Sunday to Friday, from 6:00 p.m. to 5:00 p.m. Eastern Time (ET) the next day, except on Fridays when the market closes by 5:00 p.m. ET to reopen by 6:00 p.m. on Sunday.

One contract of Micro E-mini S&P 500 Index futures settles for $5 times the S&P 500 Index value. Quoted in USD, the minimum price fluctuation is as follows:

  • Outright: 0.25 index points or $1.25 per contract
  • Calendar Spread: 0.05 index points or $0.25 per contract

There are quarterly contracts (March, June, September, and December) listed for five concurrent 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.

If you want to start trading this contract, open an account with the exchange through a futures broker and deposit the required margin. But be cautious about futures trading — while you can easily make money, you can lose more than you invested.

Micro E-mini Futures Strategies

S&P500 Micro E-mini Futures Strategy
S&P500 Micro E-mini Futures Strategy

The Micro E-mini futures market is perfect for finding trading strategies. Most of the trading strategies for the biggest E-mini S&P-500 futures contract should work quite well, even though there might be minor data differences.

Trading Strategies

This means that you’ll be able to find everything from profitable daytraders to longer-term swing trading strategies. We recommend that you start with the daily timeframe, since that’s where you’ll be able to find the most trading strategies!

Micro E-mini S&P 500 Index Futures are a great way to trade the US stock market. As a relatively new product, there are numerous strategies that traders can use to capitalize on the market volatility and potential for profits.

One strategy that traders can use to take advantage of the market is to use a combination of technical and fundamental analysis. Technical analysis involves looking at the price action of the market and identifying areas of support and resistance, as well as potential trading opportunities. Fundamental analysis involves looking at the underlying factors that could influence the price of the underlying asset. By combining these two methods, traders can identify potential trading opportunities that could lead to profits.

Another strategy that traders can use to trade the Micro E-mini S&P 500 Index Futures is to use a momentum-based approach. This involves looking for stocks that are showing signs of strong momentum and then entering into positions when the momentum is sustained. Momentum trading is a great way to capitalize on the market volatility and take advantage of price movements.

Finally, traders can also take advantage of our Strategy Library to find various strategies that they can use to trade the Micro E-mini S&P 500 Index Futures. The Strategy Library includes a range of strategies that have been tested and proven to be successful, so traders can find strategies that fit their individual trading style. With the Strategy Library, traders can also backtest their strategies and see how they would have performed in the past.

Micro E-mini S&P 500 Index Futures seasonality

Micro E-mini S&P 500 Index futures are a relatively new way of trading the S&P 500 Index through traditional futures contracts. The contracts offer investors exposure to the 500 largest publicly traded companies in the U.S. in a convenient, cost-effective way. As with any futures contract, seasonality can play a role in how the contracts trade.

Seasonality is the tendency of certain markets to be more volatile at certain times of the year. For example, the S&P 500 Index may experience higher volatility during the summer months due to increased trading activity and investors’ anticipation of the fall earnings season. With micro E-mini S&P 500 Index futures, investors can take advantage of this seasonality to increase their profits.

January

January is typically a quiet month for the S&P 500, as investors are still recovering from the holidays and many traders are still out of the office. However, the index can still be impacted by news and global events. For example, the start of the year may be a good time to take advantage of any economic or political news that could affect the index.

February

February is usually a slow month for stocks, but micro E-mini S&P 500 Index futures may be an exception. This month can bring volatility in the form of macroeconomic news and events, such as the Federal Reserve’s policy decisions. Traders should watch for any news that may affect the index and act accordingly.

March

March is usually a busy month for the S&P 500, as the index typically experiences an increase in trading volume and volatility. This is due to the start of the new year and the anticipation of the spring earnings season. Traders should watch for any news related to the S&P 500 and be prepared to take advantage of any opportunities that may arise.

April

April is a typically quiet month for the S&P 500, but micro E-mini S&P 500 Index futures may still offer opportunities. The index can be influenced by news related to company earnings and economic data releases. Traders should watch for any news that could affect the index and be prepared to take advantage of any opportunities that may arise.

May

May is usually a quiet month for the S&P 500, as the index tends to experience lower volatility and trading activity. This can be a good time for traders to take advantage of any news related to the index, such as potential mergers or acquisitions.

June

June is a typically busy month for the S&P 500, as the index typically experiences higher volatility and trading activity. This is due to the anticipation of the summer earnings season and the potential for news related to the index. Traders should watch for any news that could affect the index and be prepared to take advantage of any opportunities that may arise.

July

July is usually a quiet month for the S&P 500, as the index tends to experience lower volatility and trading activity. This can be a good time for traders to take advantage of any news related to the index, such as potential mergers or acquisitions.

August

August is typically a busy month for the S&P 500, as the index typically experiences higher volatility and trading activity. This is due to the anticipation of the fall earnings season and the potential for news related to the index. Traders should watch for any news that could affect the index and be prepared to take advantage of any opportunities that may arise.

September

September is usually a quiet month for the S&P 500, as the index tends to experience lower volatility and trading activity. This can be a good time for traders to take advantage of any news related to the index, such as potential mergers or acquisitions.

October

October is typically a busy month for the S&P 500, as the index typically experiences higher volatility and trading activity. This is due to the anticipation of the fall earnings season and the potential for news related to the index. Traders should watch for any news that could affect the index and be prepared to take advantage of any opportunities that may arise.

November

November is usually a quiet month for the S&P 500, as the index tends to experience lower volatility and trading activity. This can be a good time for traders to take advantage of any news related to the index, such as potential mergers or acquisitions.

December

December is typically a quiet month for the S&P 500, as the index tends to experience lower volatility and trading activity. This can be a good time for traders to take advantage of any news related to the index, such as potential mergers or acquisitions. That said, the month can be volatile due to the end of the year and the uncertainty of the new year. Traders should watch for any news that could affect the index and be prepared to take advantage of any opportunities that may arise.

Factors affecting the Micro E-mini S&P 500 Index futures

Many factors can affect the S&P 500 Index, and these are some of them:

Movement of the component stocks: Being a capitalization-weighted index, the movement of higher-cap stocks tends to affect the index more.

Trade policies: News of changes in trade policies tend to make stock prices more volatile, and it reflects in the price of the index futures.

Political events: Geopolitical events, such as wars, elections, and referendums, can have huge effects on stock prices and the value of the S&P 500 Index.

Interest rate changes: Changes in the Fed’s rates also affect stock prices and the value of the S&P 500 Index.

Value of the U.S. dollars: When the USD is falling, the value of the S&P 500 Index rises, and when the USD is rising, the index tends to decline.

Trading Strategies

What are some important dates and reports that affect Micro E-mini S&P 500 Index Futures.

The Micro E-mini S&P 500 Index Futures (ES) is a futures contract that tracks the S&P 500 index, which is a market capitalization-weighted index of 500 stocks chosen for market size, liquidity, and industry group representation. As a result, any news related to these stocks will have an effect on the price of ES.

Some important dates and reports that affect the price of ES include the monthly Employment Situation Report from the Bureau of Labor Statistics, which is released on the first Friday of every month. This report provides data on the US labor market, including unemployment rate, payrolls, and average hourly earnings. Any change in these numbers can have an effect on the US economic outlook, which can in turn affect the stock market and the price of ES.

Additionally, the minutes from the Federal Reserve’s Open Market Committee meetings, which are released on the Wednesday following the meeting, can also affect the price of ES. These minutes provide insight into the Fed’s monetary policy decisions and give investors a better understanding of the US economic outlook.

In addition to these reports, the quarterly earnings reports from the companies in the S&P 500 can also affect the price of ES. These reports provide an indication of the financial health of these companies, which can in turn affect the overall performance of the S&P 500.

Finally, the US midterm elections can also have an effect on the price of ES. Any changes in government policy or the political landscape can have an effect on the stock market and the price of ES.

In conclusion, the Micro E-mini S&P 500 Index Futures (ES) is affected by a variety of factors, including the monthly Employment Situation Report, the minutes from the Federal Reserve’s Open Market Committee meetings, the quarterly earnings reports from the companies in the S&P 500, and the US midterm elections. Any changes in these reports or events can have an effect on the price of ES.

Micro E-mini S&P 500 Index Futures cot report

The Commitment of Traders (COT) report is a weekly report published by the Commodity Futures Trading Commission (CFTC). It provides a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC.

The COT report for Micro E-mini S&P 500 Index Futures provides a breakdown of the open interest held by commercial traders (traders who trade for business purposes), non-commercial traders (speculators) and non-reportable traders (typically small traders). The report also provides the long and short positions held by each category of traders, as well as the net positions taken. The report is published on Friday at 3:30 p.m. Eastern time and is based on the data collected from the previous Tuesday.

Conclusion

The Micro E-mini S&P 500 Index futures offer investors a cheaper way to hedge their exposure in the U.S. stock market. It also provides traders with an opportunity to speculate on the direction of the index. The contract can be traded on the CME’s Globex electronic platform.

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

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