Cost of One E-mini S&P 500 Contract?

[wykcoff 10]

Hi all

 

I am new here and new to trading (still reading , learning, and paper trading)

 

I am i right in thinking one contract costs $500?

 

If i open a small account (very small) with $10,000+Margin how many contracts would i be able to buy. I will only start out with one contract at a time untill i am sure i know what i am doing and am profitable.

 

Any help is appreciated

Thanks.

Edited June 24, 2011 by wykcoff

[tradeemini500 10]

That amount required to trade ES contracts will depend on your brokerage, but yes you should be able to trade at least 1 ES contract with an account containing $10,000 in cash.

[wykcoff 10]

Thanks for the reply mini500 its appreciated.

 

i plan to open an account with MB trading and need $2000 to open a margin account to trade stocks, options, and futures.

 

here is a table from there site :-

 

Product Name - E-Mini S&P 500

 

Type Exchange Fee - $1.16

 

Total Fee - $2.11

 

Initial Intraday - $1,250

 

Initial Maintenance - $1,000

 

Initial Overnight - $5,000

Maintenance

 

Overnight - $4,000

Maintenance

 

 

So i am not too sure what all that means, but as far as i can tell i need $1250 per contract, and maintain a balance of at least $1000, and if i want to hold the position overnight i would need to have $5000 in my account.

Does that sound right or am i totally of base?. i could really use some help in understanding this.

 

Again any help is appreciated

Thanks

[MightyMouse 12]

Thanks for the reply mini500 its appreciated.

 

i plan to open an account with MB trading and need $2000 to open a margin account to trade stocks, options, and futures.

 

here is a table from there site :-

 

Product Name - E-Mini S&P 500

 

Type Exchange Fee - $1.16

 

Total Fee - $2.11

 

Initial Intraday - $1,250

 

Initial Maintenance - $1,000

 

Initial Overnight - $5,000

Maintenance

 

Overnight - $4,000

Maintenance

 

 

So i am not too sure what all that means, but as far as i can tell i need $1250 per contract, and maintain a balance of at least $1000, and if i want to hold the position overnight i would need to have $5000 in my account.

Does that sound right or am i totally of base?. i could really use some help in understanding this.

 

Again any help is appreciated

Thanks

 

Seems like you understand it.

 

it sounds like they won't let you trade if your account gets lower than 1250.

 

If the 2000 is not part of a larger pool of money, I would wait before you make the donation. With 2k you won't be able to use futures market leverage to the fullest capacity. If you have, say 25k, you can start a trade with 2 contracts and lose with those 2 contracts, but if you get a winner you can end up with as many as 20 contracts with that broker if you do it right. if you make only 3 pts on 20 contracts, you made 60 pts and only ever had 4 points at risk.

 

You can't do that with a tiny account.

 

MM

[Tams 20]

Hi all

...

 

If i open a small account (very small) with $10,000+Margin how many contracts would i be able to buy. ...

 

Any help is appreciated

Thanks.

 

with a $10k account,

 

theoretically you can daytrade a lot of contracts. Some brokers require only $500 initial margin.

 

practically speaking... experienced traders will tell you -- you should trade a max of ONE contract.

I would even tell you not to start with less than $20k,

 

It is not the amount of risk capital that matters,

it is not the size of your past profit that matters,

What matters is... YOUR ability to make consistent small profits, day in and day out, with minimal intraday draw down.

When you have achieved that, then you can think about larger profit targets, and multiple contracts.

 

 

my 2c only,

there are more than one way to skin a cat,

other method/criteria have proven to be profitable as well.

Edited June 25, 2011 by Tams

[bobcollett 10]

Dear USA traders

Are you saying it costs $500 to enter 1 contract?

Is this a 10 point spread @$50 a point or a one off charge ?

Here in sunny South Africa I trade the ALSI 40 which is similar to your DOW

I pay the spread which is 17 points (30 points after hours)

That means if the bid is 100 and the offer is 117 I pay 117 to buy 1 contract

At $10 a point ,it costs me $170 for 1 contract. The contract must move 17 points before I break even

The market usually moves 200 points a day, but very volitile

I thought SA was expensive but $500 is a lot more

Kind regards

bobcollett

[MightyMouse 12]

Dear USA traders

Are you saying it costs $500 to enter 1 contract?

Is this a 10 point spread @$50 a point or a one off charge ?

Here in sunny South Africa I trade the ALSI 40 which is similar to your DOW

I pay the spread which is 17 points (30 points after hours)

That means if the bid is 100 and the offer is 117 I pay 117 to buy 1 contract

At $10 a point ,it costs me $170 for 1 contract. The contract must move 17 points before I break even

The market usually moves 200 points a day, but very volitile

I thought SA was expensive but $500 is a lot more

Kind regards

bobcollett

 

No!

 

You need as little as $500 of margin to trade 1 contract. The spread that you have to pay is normally 1 tick. So, with a 10k USD account you can trade 20 contracts.

If the market is 1280 bid 1280.25 offer, then to get in right away you buy at 1280.25.

 

To get out right away you would get out at 1280 and lose .25 ( 1tick ) on 20 contracts. In ES it's 12.50 USD a tick.

[bobcollett 10]

Dear MightyMouse

Thankyou

I was quite shocked when I first read the commission story.

I have been waiting for my green card for 3 years

When I get to the USA, I AM GOING TO KILL YOU GUYS ,and George Sorres.

And I am looking for Steve46

Kind regards

bobcolett

[wykcoff 10]

Thanks for the replys and the help fellas it's appreciated.

 

I am still considering what to do. I will let you know what I decide

 

Thanks again

[TimRacette 11]

Wykcoff, you should be able to sit down with your broker and go over all the specifics. It's extremely important to fully understand all the terms and limits because a broker will close out your position if you don't meet the requirements.

 

It's also incredibly important that you don't trade more than 2 contracts with an account less than 10k. I say 2 because the difference between 1 and 2 contracts and the ability to scale out can dramatically transform your trading, so getting to 2 contracts is important.

 

That being said, if you risk 1% per trade on a 20k account that's $200, which would be an 8 tick stop on two contracts on the ES.

 

Focus on risk first, then reward.

[wykcoff 10]

Hi Tim

 

I will only be trading one contract at a time to begin with (for quite some time) and was thinking a six tick stop loss or maybe a four, although four seems a little tight to me. I will have 10k to start with, all profits will be compounded as i don't need the money to live on.

But I have also been thinking about an 8k ES account and a 2k micro forex account, still working things out, and learning.

 

Thanks for the advice.

[Cagineer 10]

If people don't know the answer they should not be replying to questions with elusive answers like politicians! That spoils the entire forum. No one wants to see a whole lot of nothing! Least of all the questioners!

 

For this I blame the moderator who allows such postings...or are you guys so desperate for text to fill posts that anything will do???!!!

 

one Emini S&P500 contract = $50 US

1 contract = 4 ticks

[bobcollett 10]

If people don't know the answer they should not be replying to questions with elusive answers like politicians! That spoils the entire forum. No one wants to see a whole lot of nothing! Least of all the questioners!

 

For this I blame the moderator who allows such postings...or are you guys so desperate for text to fill posts that anything will do???!!!

 

one Emini S&P500 contract = $50 US

1 contract = 4 ticks

 

Hi Cagineer

So one contract costs $50

What has the 4 ticks got to do with it?

Is this the spread to break even?

More questions!!

And thats what I like about TL . I can ask questions

Regards

bobcollett

[Tams 20]

If people don't know the answer they should not be replying to questions with elusive answers like politicians! That spoils the entire forum. No one wants to see a whole lot of nothing! Least of all the questioners!

 

For this I blame the moderator who allows such postings...or are you guys so desperate for text to fill posts that anything will do???!!!

 

one Emini S&P500 contract = $50 US

1 contract = 4 ticks

 

which kettle is black?

 

 

 

note: black is not the politically correct adjective anymore.

[MightyMouse 12]

which kettle is black?

 

 

 

note: black is not the politically correct adjective anymore.

 

melanzana might work, but I don't think you can use that either.

[Predictor 11]

No, you have the wrong idea entirely. 1 ES contract is worth $50 * the price quoted. This is about $60,000 worth of SPY. Your broker will typically require anywhere from $500 to $1500 to open 1 contract. This is margin you put up. This is for day session. Overnight the CME sets a higher margin, it runs around $5,700.

 

I recommend if you are new that you should probably need at least 15k to start trading futures. If you are highly experienced, it is possible to do it with a 7k-8k account or even a bit less.

 

 

 

 

Hi all

 

I am new here and new to trading (still reading , learning, and paper trading)

 

I am i right in thinking one contract costs $500?

 

If i open a small account (very small) with $10,000+Margin how many contracts would i be able to buy. I will only start out with one contract at a time untill i am sure i know what i am doing and am profitable.

 

Any help is appreciated

Thanks.

[bobcollett 10]

Dear Wykoff

If you are "new",you should,nt be trading Futures !!!!!

You will loose all your cash

You should start with nice moving shares like General Motors or General Electric.

They cost more to trade ,and you wont make any money, but your money lasts longer while you learn

And learning takes 5 years ( 8 hours a day X 200 days a year X 5 years = 8000 hours)

So if you are a part time trader , it will take a while.

And about FIVE $20000 accounts

Kind regards

bobcollett

[intothefutures 10]

Seems like you understand it.

 

it sounds like they won't let you trade if your account gets lower than 1250.

 

If the 2000 is not part of a larger pool of money, I would wait before you make the donation. With 2k you won't be able to use futures market leverage to the fullest capacity. If you have, say 25k, you can start a trade with 2 contracts and lose with those 2 contracts, but if you get a winner you can end up with as many as 20 contracts with that broker if you do it right. if you make only 3 pts on 20 contracts, you made 60 pts and only ever had 4 points at risk.

 

You can't do that with a tiny account.

 

MM

 

MightyMouse, can you elaborate on this comment? I'm a newbie. I'm not sure I understand what you mean.

 

If you have $25k, and you trade 2 contracts, how do you end up with 20 contracts, and how do you risk only 4 points for a 60 point gain?

 

Sounds great, but I'm just confused on how you would accomplish this.

[BlueHorseshoe 10]

MightyMouse, can you elaborate on this comment? I'm a newbie. I'm not sure I understand what you mean.

 

If you have $25k, and you trade 2 contracts, how do you end up with 20 contracts, and how do you risk only 4 points for a 60 point gain?

 

Sounds great, but I'm just confused on how you would accomplish this.

 

Hi intothefutures,

 

Not certain what MM was meaning exactly, but . . .

 

Once you have an open profit on a position you can move your stop-loss to "lock in" profit. At this stage you have neutralized your risk but you still have a position with (theoretically unlimited) potential for profit. The "locked in" profit can now be used to fund further contracts to add to the position.

 

A few things that you need to be aware of are that this would generally only be appropriate for scaling into a more significant market movement (trying to drag stop losses up behind the market every few ticks on small scalping type day-trades will generally just lead to stops being hit by the "noise" of the market), and that any kind of adjustment to the position of a stop loss can and will alter the dynamics of the return of your strategy over time.

 

Here is a quick (simplified) example:

 

• You need $1128 to fund a single contract of ES. Your account balance is $2256.
  
• You buy 2 contracts at 1760.***
  
• The market moves to 1774, giving you an open profit of $1400.
  
• You move your stop-loss to 1772.
  
• You now have a guaranteed profit of $1200, and 2 contract position with an open profit of $1400.
  
• You buy another contract of ES at 1774. You can do this because your account balance is $1400 higher than it was when you bought your first two contracts. Although this is theoretically "open" profit, in actuality it is the same as closed out profit because your trailed stop loss prevents it being lost.
  
• The market trades up to 1782. Because your open profit above 1774 is now the product of a 3 contract position, you only need the market to move two thirds the distance it moved last time before you are able to add another contract.
  Once a fourth contract is added, the market will only have to move in your favor by half as much as with two contracts, before the necessary profit is made to add a fifth.
  

 

Finally, note that this is pretty "advanced chess". I've never done it. Not even on swing positions where I could have. When you get it right and the market continues to run in your direction, it should result in outlier gains on single trades.

 

Hope that helps!

 

BlueHorseshoe

 

*** I am NOT suggesting that it would be appropriate to trade two contracts with this initial balance - a single tick of movement against you and you'd be below required margin!

[MightyMouse 12]

MightyMouse, can you elaborate on this comment? I'm a newbie. I'm not sure I understand what you mean.

 

If you have $25k, and you trade 2 contracts, how do you end up with 20 contracts, and how do you risk only 4 points for a 60 point gain?

 

Sounds great, but I'm just confused on how you would accomplish this.

 

The way you do this is you start a position with 2 contracts risking 2 points (if it moves against you, you lose 4 points 2x2). As it moves in your favor you add to the position and add and add and you can end up with 12, 15, 20 contracts, or etc. When your position has grown to 20 contracts and price is 3 points above your average price for the 20 contract position, then if you close it out, you will have grossed 60 points in profit. You really need to know what you are doing to do this. It comes with huge gains and lots of heart aches.

 

To do this you need enough money in your account to meet the minimum margin of your broker for day trading. If you tried to hold a 20 contract position into the overnight with an account size of $25k, your broker would close out the position or close out the contracts that do not meet the min margin for holding overnight.

 

If you are new to trading and can't wait to start trading live, pick a target and a stop and develop the balls to stay in the trade until either the target or stop are hit. If you can accomplish this, you will be miles ahead of most.

 

Good Luck

[intothefutures 10]

Thank you BlueHorseShoe and MightyMouse! That was very helpful. I understand what you mean now. I was just curious what you meant, because I wasn't able to follow your line of reasoning. Now I can.

 

Question... if I start with a 20k account, trading 2 contracts, what are some of the best ways to get consistently profitable as a beginner?

 

Trade gaps? Trade 2-3 hrs in the morning only (EST)?

 

What kind of setups and indicators is it best to use, and why are people using tick charts instead of candlesticks?

 

I realize these are loaded questions. Just trying to figure out where to get good quality info on how to get started with futures day trading. There seems to be an abundance of information and e-books, and "trading schools" but I don't know who's credible, and some are asking for a lot of money, or teaching platforms like Ninja Trading, which I never heard of. I was thinking of using ThinkorSwim. Is that okay for futures, or do I need to get something like TradeStation?

 

Lastly, I've heard conflicting opinions about whether or not to paper trade. Any thoughts?

 

Thank you in advance for any info you can provide.

[BlueHorseshoe 10]

Thank you BlueHorseShoe and MightyMouse! That was very helpful. I understand what you mean now. I was just curious what you meant, because I wasn't able to follow your line of reasoning. Now I can.

 

Question... if I start with a 20k account, trading 2 contracts, what are some of the best ways to get consistently profitable as a beginner?

 

Trade gaps? Trade 2-3 hrs in the morning only (EST)?

 

What kind of setups and indicators is it best to use, and why are people using tick charts instead of candlesticks?

 

I realize these are loaded questions. Just trying to figure out where to get good quality info on how to get started with futures day trading. There seems to be an abundance of information and e-books, and "trading schools" but I don't know who's credible, and some are asking for a lot of money, or teaching platforms like Ninja Trading, which I never heard of. I was thinking of using ThinkorSwim. Is that okay for futures, or do I need to get something like TradeStation?

 

Lastly, I've heard conflicting opinions about whether or not to paper trade. Any thoughts?

 

Thank you in advance for any info you can provide.

 

Hello,

 

These are all very subjective questions (although I do realize that to you they probably seem perfectly reasonable).

 

You'll get as many different answers as people you ask.

 

Here are some bits of advice I would give you - they have very little to do with "becoming a consistently profitable trader" or "trading for a living", and more to do with how approach the long journey on which you about to commence . . .

 

Don't pay for anything in terms of educators, courses, any instructional stuff. Everything you need to know, and everything you can know, is already there in the data that you have at your disposal. All that makes the difference in the long run is your ability to analyze this.

 

Learn lots and lots of (relatively rudimentary) statistical analysis methods, and just as importantly, how to determine how robust your findings may be. By interrogating the data you can uncover general tendencies that will instruct your trading. You don't trade by reading about something in a book (or on a forum) and then doing it - you have to be cynical, assume everything is rubbish and focus your efforts towards trying to disprove it (proper scientific method), and treat your own ideas and insights in a similar fashion. With time, you will uncover a few diamonds in the rubbish tip. Be a scavenger. Be a cynic.

 

Learn about money management. Money management is about stop-losses or anything like that. It's not about when to buy, sell, enter, or exit, but about how much to buy or sell. This is how wealth can be built from a limited capital base.

 

Learn about market micro-structure. Often ignored (used to be less relevant). I can show you numerous simple strategies that would rake in several thousand dollars per day on a single contract with a $5k account, before you've paid for liquidity (and with these costs deducted - i.e. reality - they will empty your account just as fast). Once you understand market-microstructure you can decide how to position yourself in terms of it.

 

I hope that helps.

 

BlueHorseshoe

[intothefutures 10]

Thank you again BlueHorseShoe. Yes, that does help, and I'm sure that in a few years from now, I would look at my post and scratch my head.

 

How do you feel about Van Tharp's ideas about money management? That's mostly what I learned so far that made sense to me: position sizing, expectancy, etc.

 

As for statistical analysis methods and market micro structure, I am not familiar with those concepts, but I will Google it and see what I can find out. If you have any specific resources in mind I will definitely check them out.

 

I started paper trading the ES today without a real plan, without a clear idea of how to configure my charts, and without really knowing how to use thinkorswim, and I see what you mean about just how long the journey might be...