The truth is that most professional day traders use S&P500 E-Mini futures to day trade the markets. In fact, most of what we do at Landshark is futures & options trading - Futures for day trading and options for longer term holds. In this new blog we're going to give you 5 reasons why futures trading is a great starting point for new investors.
1. Start with as little as $2,500
The good thing about S&P E-Mini futures is that the day trading margins are just $500 per contract. This means you can place a trade for just $500 and some brokers will allow you to fund with as little as $2,500. Now obviously, the more capital you have the better but the point here is you can control a product for just $500. Try buying $500 worth of shares and see how long it takes to get a return.
2. No Pattern Day Trading Rule (AKA $25,000 minimum)
Unlike stocks futures don't require you to have $25,000 in your account to day trade. Let us explain what this means: With stocks you can only make 3 day trades (buy apple in the morning sell it 5 minutes later) in any 5 business day period. If you do, you have to wait until the 5 business days end to get another 3 day trades to reset. With futures you can make as many day trades as you want with whatever account size you want. This alone is a HUGE benefit for investors starting with small amounts of money.
3. Trade almost 24/7
Yea, you read that right. Futures trade almost 7 days a week. You can begin trading Sunday evenings and trade all the way until Friday afternoon. This is great if you want to trade the London market open at 2 am EST or trade just the US market close at 4 pm. This flexibility is huge for those with jobs because of the movement that futures provide.
For every 1 point the S&P 500 E-Mini moves it translates to $50. If you buy 1 contract and it moves 5 points thats +$250 into your account. And the cost to make that trade? Just $500. Yup! The broker just holds $500 of your account and when you sell it the margin hold is released. Now imagine buying $500 of a stock, you'd have to get it to really move to make any real money.
5. One Market, Less Charts
When you trade S&P 500 E-Mini futures you only have to worry about trading one chart. This makes trading that much easier. No following a new stock watch list each day, no scanning, no analysis every night, just one chart to follow and to learn. For this reason alone many traders use S&P500 E-Mini with one or two other futures products and that's it.
These are, in our opinion, the top 5 reasons why futures trading rocks. If you're new to trading this market in particular tends to move a bit slower as well which makes learning to trade on it a bit easier than say a market like Crude oil. Be sure to check out these helpful videos below:
Intro to S&P500 E-Mini Futures
Live 5 Point E-Mini Trade