This entry was posted on Wednesday, March 28th, 2007 at 8:10 am and is filed under Education. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
I wanted to take the opportunity to explain a little about what vehicle I am trading in my live videos. What is being traded is the SP-500 futures contract. It is the miniature version of the larger floor traded contract and is 1/5 th size. This E-mini contract is entirely electronic and it trades on the Globex system. Each point is equal to $50 in profit per contract. The price moves in 0.25 increments meanng each tick (minimum price movement) is equal to $12.50. You can find more information at the CME website.
I trade these contracts through Interactivebrokers for less than $5.00 per round turn. This contract is extremely liquid and is used by many large financial institutions for hedging, speculation, and a liquid trading vehicle. To give you an idea how deep this market is - in some 1 minute periods I will see 10,000 contracts change hands. Do the math. Thats 10,000 x $50.00 per contract x 1433.00 (index value)= over $716,000,000 of SP500 stock changing hands on a minute to minute basis.
I personally have traded the SP’s for over 10 years. I used to trade the floor traded contract and now I trade the e-mini version exclusively. I wanted to also explain that the simple method I am using in the videos requires some screen time. You cannot just trade every setup. It takes time to acquire that feel for when the best, low risk setups are happening. I personally have about 2 dozen setups I look for on an intraday basis but on any given day I may only take about 1 -6 trades. I suppose 3 is about average. I will go through periods of higher activity and then fall back to more quiet periods. When my other systems in the higher timeframes have high exposure my intraday trading tends to be smaller and less frequent., versus a period like now where equity trend stuff has exited and I am sitting on a high cash level.
Have a Great Trading day. Looks like the whole Iranian situation and Bernanke speaking will have the markets at their emotional best.
Have a Great Day!
Dave Johnson
March 28th, 2007 at 2:44 pm
[...] a followup to Dave’s explanation of how the emini contract works, I wanted to elaborate on the leverage and risk of the emini. One [...]
March 29th, 2007 at 3:06 am
Do you utilize NYSE TICK?
March 29th, 2007 at 9:09 am
Hello Yaser,
Yes I do utilize NYSE Tick , AMEX Tick and anything else I can build my case with. I want the setup to jump off the screen and force me to take the position. In my case that only happens a couple tmes per day.
But as I have said in my chatroom I don’t exclude anything. I use all of my skills, tools, and experience to make decisions.
By the way your site s quite good as well. I will get it into the blogroll.
Dave
April 3rd, 2007 at 12:29 am
[...] trading the S&P 500 e-mini contract. Each 25 cent move on the screen is worth $12.50 per contract. dave johnson, daytrading, [...]
July 17th, 2008 at 11:14 pm
Hellow Dave,
A few hours ago, I found your site. I must say, your site is very interesting. I’m working on the CMT Level 1 degree right now. I’ll test out later this year. Then go on to level 2 and 3. I hope I will not have to study for level 3 in my grave with a flashlight as I’m in my 60s. I’m learning to survive in he stock market, tho, I must say, when I first started a couple of years ago, I “paid my dues.”
Should you have the time, please send me an email and you may want to inform me if the E-mini is just restricted to the S & P 500? Or other indicies?