Getting Started with Micro E-mini Futures
In this post:
- What are Micro E-mini futures?
- Micro E-mini futures trading strategies
- How to trade micro E-mini futures?
- The difference between micro vs mini futures
Since coming out in 2019, it seems like a new Micro E-mini futures contract is added to the CBOE every month. It started with the main indices, but now we have crypto, crude, Aussie/dollar, etc. My prayers have been answered! But now I wonder what will be added next – coffee & corn Micro E-mini? I’m game!
Since Micro E-minis are booming, and I love to trade them, people ask me a lot of questions about them. So let’s talk about the benefits of trading Micro E-mini futures contracts and what I think you should know about them.
What Is An E-mini Futures Contract?
So I think you’re probably familiar with minis, which are normal futures contracts. Micro E-minis, which I like to call E-Micros or just Micros, is 1/10th the size of minis. Thus, they are 1/10th the margin requirement which is great news for the retail trader because now the contracts are more affordable. With the traditional minis, you probably need a higher net-liquidating value (NLV) which can make it difficult to get your feet wet.
The Benefits of Trading Micros
I started trading the S&P 500 Micro E-Minis and the Russell Micros (/MES and /M2K). Then I bridged over to the Nasdaq Micro E-minis (/MNQ) because I felt like I could leverage more with more volatility. Eventually, I felt like I was more profitable and in and out of trades much faster, so that was a double ++ and for the most part, it’s been a rather smooth ride.
The only time I figure someone’s had a really “rough-ride” trading futures is when they didn’t have a stop or were over-trading. Beyond profits, I have found that trading the Micros is a great starting point for futures traders. You can really understand your own personal risk tolerance, and more importantly, you can be handed the hard lessons in trading with WAYYY LESS RISK. So again, if you are new to futures trading, you may want to start with Micro E-minis.
My Micro E-Mini Futures Trading Strategies
Like I said earlier, I’m in and out of trades within seconds, or up to a few minutes, in super high volatile environments (like we’ve seen this year). I don’t think this volatility is going to let up anytime soon, and since 2019, I’ve fine-tuned a few strategies that can help you in your trading.
So, for starters, if we are going to be trading in high-volatile environments, wouldn’t we need to trade off 1, 2, 3, and 5-minute charts?
YES! And that’s exactly what I do.
One way I do this is I look for market conviction using our proprietary Squeeze Pro indicator combined with the 10X Bars – those two indicators are essential to my strategy, not to mention they make trading a lot easier. I closely compare the different time frames: starting with the 10-minute chart for context, then finely focusing down from the 5-minute, then to the 3-minute, then down to the 2-minute, and finally, the 1-minute. Think of this concept as looking in a microscope (no pun intended), the closer you get to the lens, the more you zoom in and find entry.
In addition to comparing time frames, I have other strategies with those two indicators. I invite you to come to listen to me in our Day Trading room or our Futures room as I broadcast live and walk through my process every day.
Coming back to those lower time frame charts, another thing I rely on is the standard deviations. When I see a 2nd deviation move happen on the 2-minute chart on /MNQ one way or the other, I want to take the opposite side.
I try to trade the wave that is created based on standard deviations and a collection of time frames. I have to admit, this strategy didn’t come easily, BUT it did come NATURALLY. In college as a psych major, I was more interested in the numbers that represented human behavior based on statistical analysis. I naturally gravitate to the WHY, as in, “WHY is this going up and down like that?” And, “When should it stop and reverse?” I’m considering the natural laws of the universe and trading those, not just picking out some levels and going with them.
I’d like to think my strategy is not defined by me but yet refined by me. What could I possibly see before anyone else does? Or, what could I anticipate before anyone else anticipates? One of my favorite books is “The Madness of Crowds.” It’s definitely worth the audible if you have time. I could totally relate to a part of the book’s message about catching up on a good idea and still thinking you’re early. How laughable!
Yet, with some focus and a system, you can certainly give yourself some edge when trading. My main goal is to unpack all the many highly technical intricacies of what I do, really just in an effort to completely simplify it for you. We already know that reading already has enough emotional demands, we don’t need to waste any more of our precious energy to be a happy healthy human!
A Summary of My Tips on Micro E-Minis
When starting with Micros, it’s a really good idea to start with something small like 2 to 3 contracts. Do this for a week, and if you are completely bored, then guess what? YOU ARE CORRECT!
It’s good to learn the value of smaller risk, little attachment, and not always thinking about your trades. This way, you’re not blowing up your account, and thus, continuing a healthy journey on your way to trading futures.
Overall, my goal has been to show you how to start small, outlining the dark and the light side of leveraged instruments – specifically futures, and even more specifically, the Micro E-minis. I hope this has been helpful!
Feeling motivated to start your futures journey or looking for a way to supplement your options trading using Micros? Maybe you just want to watch someone do this before you give it a go. Well, I’m your guy.
I’d love the opportunity to throw out some “aha-moments” for you and guide you on your path to understanding risk. At the end of the day, that’s all you are doing as a trader… managing risk. When it comes down to putting on the trade, you’d want to get all there is to know from someone who has been there and has refined their micro strategy. If that sounds like you, my Micro Futures Formula is a great place to start.
Q: What are micro e-mini futures trading strategies?
A: I primarily trade on 1, 2, 3, and 5-minute charts and use our Squeeze Pro and 10X Bars indicators.
Q: What is the difference between micro vs mini futures?
A: Mini futures contracts are normal futures contracts, while Micro E-Minis, which I like to call E-Micros or just Micros, are 1/10th the size of minis.
Q: What are the advantages of trading the S&P 500 E-mini futures?
A: “Aside from making profits, trading the Micros is a great starting point for futures traders. You can master your personal risk tolerance, and learn your lessons with smaller risks.”