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Frequently Asked
Questions
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Emini
Trading Explained
It
is important that you understand the basics of the Emini
futures
and day trading. You will need to become
familiar with
the Nasdaq Emini's and terms and phrases
like Margins
and Contracts - the basics.
- Contract - An
agreement made at a specific price
for delivery on a certain day. The Emini Contracts are all cash based.
Also known as Futures Contracts.
- Trader - An
active trader who opens and closes positions the same day and seldom
hold positions after the close. A day trader usually trades very liquid
markets like the Nasdaq Eminis, Erussell Eminis, Dow Eminis, and
Nasdaq Eminis.
- Nasdaq Eminis
- The emini futures market that is a basket of 30 stocks. It
is the average of the Nasdaq tech market.
- Emini
- A
mini contract that is traded exclusively on an electronic trading
facility.. E-Mini is a trademark of the Chicago Mercantile Exchange.
- Front Month
- The current trading month. The Nasdaq Eminis trade
4 contract months: March, June, September, and December.
- Futures
- Market trading in contracts to buy and sell a particular
commodity at a fixed price on a certain date.
- Limit Order - An
order to enter a position at a set price or better.
- Market Order - An
order to enter a position at the next available price.
- Mini - Refers
to a futures contract that has a smaller contract size than an
otherwise identical futures contract.
Q: How much money
do I need to trade the Nasdaq Emini's?
A: This will vary from broker to broker, most have a minimum amount
to open a futures trading account of approximately $2,000 -
2,500.
Q: How much is 1 point of movement worth for the NQ - nasdaq Emini's?
A: Twenty dollars - $20 per point.
Q: How much are
commissions?
A: Here again, this is going to vary from broker to broker,
but you can expect a round trip trade to cost about $5.00.
The
Nasdaq Emini is a totally electronically traded market, Hence
the “E” in E minis. It is also traded in fractions
of the
full Nasdaq futures contract - hence MINIS. The margin
requirements on the Emini contracts are usually
$500 to $1000. The E-minis are a separate market from the large, full
contract and mirror the performance of the Nasdaq market.
The Nasdaq Eminis
Futures Market
Although
the Nasdaq Eminis
are a stock index, they are not traded at the stock market. The Nasdaq
is a Futures contract, and therefore you buy and sell futures
contracts. A futures contract is an agreement between a buyer and
seller to deliver commodities by a certain day. For example, if you
bought a futures contract of corn, and you held your contract to
expiration (delivery) you would be physically delivered your corn. Of
course, you probably didn’t buy the corn to take delivery of
5000
bushels yourself. More than likely you speculated future prices of corn
to go up in value so you bought it only to sell at a later date, before
expiration. You can buy and sell any futures contract any time you
want, you are not obligated to hold onto it. The good news is, the
Nasdaq is a CASH MARKET. Nothing really gets delivered. At
expiration you are simply profitable or not. It’s traded as a
futures
contract to provide a hedging vehicle for those with exposure in the
stock market and it’s traded as a futures contract for
speculative
purposes.
You
are not limited to trade just the Nasdaq Eminis.
There are several other Emini markets available. You can trade Dow
Minis, E Russell Minis, S&P Minis.
The
reason we selected the Nasdaq E-minis is because it is
very liquid—meaning it has a lot of volume and a lot of price
movement. A lot
of volume means you can get in and out very quickly.
The minimum price movement the
Nasdaq Eminis can make is called a TICK. A Tick is worth $5
(per contract). 4 ticks make a complete point in the
Nasdaq Eminis,
meaning one point is worth $20.00 (per contract). You can trade as many
contracts as you like, providing you have the trading capital to do so.
To trade the Nasdaq Eminis you are going to have to open up a Futures Trading Account
with a Futures Broker. You complete the required account opening
documents and study the disclosures provided. Upon acceptance of the
account by your futures broker, you will be instructed on how to fund
the account. Remember that trading carries a substantial risk of loss
and is not suitable for every investor.
The
methods you will learn in with Emini Viper give you the
potential to make money when the market goes up and when the market
goes down. However, it is impossible to predict the actions of the
market and therefore, we make no guarantee that you will make money.
There is always the risk of loss. Only trade with risk
capital.
When
you speculate the market will go up, and you initiate a
trade, it is called “going long” (good old
fashioned buy low, sell
high). First you BUY a contract to OPEN a new position. When the price
reaches your target you SELL the contract to CLOSE the position.
It’s a little different when we speculate the market is going
to go
down. This is called "shorting the market". In this circumstance we
will SELL to OPEN and BUY to CLOSE.
We are truly here to help you
learn to day trade the Emini
markets! We
are committed to your success and will always answer all your
questions. After a few weeks of coming to The Live Trading Room, and
watching Daily Videos—you will know everything you need to
know about
trading the eminis. You probably will not need much
support—but if you
do—we are here for you!
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