If you are looking to expand your forex trading into new markets then one obvious choice are emini futures contracts. These represent the next level in your trading career.
In this first part of a short series I want to quickly explain what a futures contract is and then specifically what the S&P 500 futures contract is.
A futures contract is an agreement between a seller to deliver and a buyer to take delivery of a commodity at a specified future date.
Originally these contracts were always for physical commodities such as Corn, Gold, Crude Oil etc. However nowadays much of the futures trading is based on stock price indexes like the S&P 500. This means that you are buying virtual rights to a certain value in the index that can then be sold on to someone later at a different price.
The price of the futures contract moves very closely with changes to the underlying index which itself moves as the value of the stocks that compose that index change.
The futures market is often priced slightly higher or lower than the underlying index or cash markets but generally tracks them very closely.
So for instance the emini S&P 500 futures contract is based upon the Standard & Poor’s 500 US index which is calculated using a basket of 500 large company stocks that are considered to be widely held and hence representative of the market as a whole.
When you buy an emini S&P 500 futures contract you are tracking the combined fortunes of 500 of the largest US companies all at one time.
Next I want to look at some of the advantages of emini trading and believe me there are many.