Recently introduced futures contracts, called micro e-mini futures, are a type of future traded on a smaller scale than regular futures contracts but still offer the same benefits and risks. Micro e-mini futures offer an opportunity to trade on a smaller scale and with less capital for traders looking to get involved in stock trading.
When trading micro e-mini futures, remember:
- Because these contracts are traded on a smaller scale, they may be subject to higher volatility and more price movement.
- Micro e-mini futures contracts have shorter expiration dates than regular futures contracts, so it is essential to know this when placing trades.
- Because micro e-mini futures are a relatively new product, they may not be offered by all brokerages.
When considering trading micro e-mini futures, it is crucial to understand the basics of futures trading. Futures contracts are engagements to buy or sell an asset at a future date, at a price determined today. Futures contracts are traded on exchanges, and the prices of these contracts are determined by supply and demand factors. Traders can use futures contracts to speculate on prices’ future direction or hedge against price movements in the underlying asset.
Micro e-mini futures contracts are available for various assets, including stock indexes, commodities, and currencies.
How to trade micro e-mini futures in stock trading
Choose a broker
Not all brokerages offer micro e-mini futures contracts, so the first step is to find a broker that does. When you choose a broker, it is crucial to consider factors such as fees, account minimums, and the range of products offered.
You can contact Saxo Bank Netherlands for more information.
Open an account and fund it
The next step is to open an account with the chosen brokerage. Most brokerages will require a minimum deposit to open an account. Once the account is funded, traders can begin placing trades.
Choose the contract you want to trade
Micro e-mini futures contracts are available for a variety of different assets. Traders should choose the contract they want to trade with based on their investment objectives and risk tolerance.
Place your order
Once you have chosen the contract you want to trade, you can place an order through your broker. You can place orders for micro e-mini futures contracts for both buy and sell positions.
Monitor your position
After placing your order, it is essential to monitor your position. You can do this by tracking the underlying asset prices and the micro e-mini futures contract.
Close your position
When ready to close your position, you must place an order with your broker. Orders to buy or sell micro e-mini futures contracts can be placed online or over the phone.
Settlement
Micro e-mini futures contracts are settled in cash, meaning no physical delivery of the underlying asset takes place. Instead, traders will receive or pay the difference between the contract’s price at expiration and when they entered the trade.
Benefits of micro e-mini futures
Lower capital requirements
Micro e-mini futures contracts are traded on a smaller scale than regular futures contracts, requiring less capital to trade. Micro e-mini futures can be a good option for traders with limited capital.
Increased flexibility
Another benefit of micro e-mini futures is their increased flexibility for traders. These contracts have shorter expiration dates than regular futures contracts, allowing traders to take advantage of short-term market moves.
Access to a wide range of assets
Micro e-mini futures contracts are available for various assets, including stock indexes, commodities, and currencies, giving traders access to a wide range of markets and diversifying their portfolios.
Reduced risk
Micro e-mini futures contracts are less risky than regular futures contracts because they require less capital to trade. It can help traders manage their risk and protect their capital.
Easy to trade
Micro e-mini futures contracts are easy to trade, and traders can trade them online or over the phone, making them a good option for those who want to take advantage of market moves without worrying about the complexities of trading regular futures contracts.
