I trade Forex, commodities and many other futures markets including bonds and indexes. My preference is E-mini trading and nowadays I tend to favour E-mini day trading over even E-mini swing trading.
There are several reasons for why I prefer E-mini day trading to any other form of trading:
Firstly the margin that you have to deposit when day trading the E-mini is 25% of the initial margin that you would otherwise have to deposit if holding positions overnight. With my broker the margin required for the E-mini S&P is around $5,000 to control a contract worth around $100,000. This gives leverage of approximately 20 to 1. If however you day trade the E-mini S&P margin then the margin drops to around $1,250 giving you effective leverage of closer to 80 to 1. This allows you to either deposit a lot less margin or to trade significantly larger size when day trading the emini compared to swing or longer term trading. The smallest E-mini index is the mini dow where day trade margin is around $1,000.
If you look around some of the brokers are offering emini daytrade margins as low as $500 for one lots giving you leverage of closer to 200 to 1.
Now I’m not suggesting for a moment that you would want to use, or indeed should use, 200 to 1 leverage but it is nice to know it is there. It also allows you to deposit less of your capital with the broker which leaves more available to allocate to some other venture.
The second reason I like to day trade E-mini contracts is because you close out all positions at the end of the trading day. Typically this is around 9 pm London time. This means that you never go to bed with any open positions to worry about – which I find makes for a better nights sleep !
Not holding positions overnight also limits your exposure to any catastrophic events that may occur as you are only in the market half as long as a longer term trader would be. Holding overnight also tends to be more risky than holding during normal day sessions. This is because whilst the E-mini contracts trade throughout the night volume is thinner and in the event of a catastrophic event movements could be exaggerated. This would also be the case with forex moves.
Daytrading also means that if you feel like going away for three or four days you can just turn off the computer and jump on an aeroplane. When trading commodities for instance, which typically one holds for much longer periods of time, you need to either continue monitoring your trades progress on a regular basis whilst on your break or delegate that responsibility to a friend or trading partner.
Neither is ideal and nowadays when I want a break I want a proper break. I will just turn the computer off and forget about trading completely. After all trading is not just about the money but even more so about the improved quality of life it brings. No point in giving up being a slave to the company only to become a slave to the trading screens.
The third reason is that missing a trade becomes far less critical as emini daytrade outcomes tend to be more homogenous. One of the keys to longer term commodity trading for instance is that you must never ever miss even a single trade because a large proportion of your entire year’s profit could, and often is, derived from just that one trade. There is absolutely nothing more soul destroying than treading water in your trading account for maybe six months only to go away for a week and miss out on the one trade in the year that goes to the moon !
In emini day trading no single individual trade outcome is nearly as critical to your total profits. As we are trading every day, sometimes multiple times a day, individual trade profits are much more evenly spread. This means if you miss a single trade or indeed several it will not make much difference to your annual profits. Again this makes for a more relaxed lifestyle with a lot less stress.
Of course automated emini daytrading is even better because we do not even need to be at our trading screens we just let the computer do it for us. The Protrader Automated trading course teaches you how to do exactly this.