Understanding Dow Futures – Part 5

Emini contracts have experienced a boom in new market participants since their introduction mainly because of their lower margin requirements which allows traders that don’t have unlimited funds to participate in the index futures markets. Emini contracts are available to trade on all three major indexes including the S&P 500, NASDAQ and the DOW and are widely utilized by traders for both day trading and scalp trading.

The Dow eMini contract is one-fifth the size of the large contract which makes it appealing to traders with smaller brokerage accounts. Because the emini futures market is fluid, volatility creates opportunities for traders to profit everyday. Stagnant and sideways markets that so often are a part of the stock market is virtually non-existent in the index futures market. The New York lunch hour is usually the only slow time during any given daily session since floor traders and other market participants break for lunch, with action quickly resuming once the lunch hour is over.

Some traders only trade the first hour to hour and half each day, taking their profit and doing whatever they wish for the rest of the day, while others will trade only during the first and last hours of the day. The opening and closing hours of the day often see the most volatility and market moves, although many opportunities to profit are available throughout the day.

One of the most exciting features of the index futures markets and what attracts traders is that market direction is not a concern. Traders can profit by executing trades both long or short and only care about being on the right side of the trade. Unlike stock trading, hours of research and chart scanning for potential stocks to trade is eliminated with emini index futures trading. Since the same contract will be traded each day, there is no need to look over hundreds of charts each night.

Emini future trading offers and opportunity for traders to profit on volatility within the market on a daily basis. Although the futures market is influenced by financial news reports and geo-political events, the emini trader can usually sit on the sidelines when financial reports are scheduled to be released. Almost all financial reports have specified release times which allow the trader to plan his strategy around these reports. There is no need to worry about stock analyst downgrades or unexpected news events that are so common on the stock exchanges, which can adversely affect a trader’s positions.

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