Trading Micro Futures for Beginners: $MES $MNQ Tutorial

Have you looked into trading micro futures for beginners or $MNQ? Futures run for 23 hours a day. As a result, you can trade them at night after work. Or before work. That means you can trade even if you work a full time job. You’re not reliant on trading during market hours. That’s pretty great! Especially if you don’t want to swing trade. 

Trading Micro Futures for Beginners

  • The CME Group(Chicago Mercantile Exchange) began selling Micro E-mini futures contracts in May of 2019. These are futures for the four major U.S. stock indices: the S&P 500, Nasdaq-100, Dow Jones Industrial Average, and Russell 2000. The trading schedule for Micro E minis is from Sunday at 5 pm Central Standard Time to Friday at 4 pm CST. With hours during the week of 17:00-15:15 and 15:30-16:00 CST.

Micro E-mini futures were created as another way for retail traders to trade in the stock market. Micro futures ($MNQ) allow traders to trade these major U.S. stock indexes with only the posting of a performance bond.

This a guarantee required of futures contract buyers and sellers ensuring contract fulfillment. Or a margin requirement of between five to seven percent, depending on the brokerage, of the contract’s notional value.

You can take our futures trading course if you want to learn more about trading micro’s. 

Trading Micro Futures

Benefits of Trading Micro Futures for Beginners

The main benefit of the Micro E-mini futures is that they’re a fraction of the E-mini contracts’ size (1/10 the size). Which means that much less capital is required to trade in them.  

However, they provide the same benefits and risks that their larger valued cousins, the E-minis, provide. 

The whole reason they were created is that the notional value of the market has increased over the years since the E-minis were released (in 1997). 

Thus, the standard E-minis were priced out of reach of many investors. The Micro E-minis are balancing this increase and making them more accessible to all retail futures traders. 

These Micro E-minis are an excellent way to speculate on the major stock market indices. But with a lower dollar amount required to put them at risk, this can be further decreased with margin trading.  

They also allow the hedging of a smaller portfolio with these micro products. A trader can easily hedge a diverse portfolio of stocks, reducing their exposure by selling a micro future. 

Trading micro futures should only happen when you understand what are futures in the stock market.

The 4 Micros of Futures Trading

  1. S&P 500 Micro E-mini $/MES
  2. The Micro E-mini Nasdaq-100 $MNQ
  3. Micro E Dow $/MYM
  4. Micro E-mini Russell 2000 $/M2K

S&P 500 Micro E-mini

The S&P 500 Micro E-mini with the symbol /MES is focused on the large-cap stocks of the S&P 500. Which is the most well-known indicator of the US stock market’s health.  And one everyone knows when trading Micro Futures.

The multiplier for this future is $5, which is 1/10th that of the mini S&P.  It has a minimum tick of 0.25. And that dollar value equates to $1.25.  

This means that every 1 point move in the /MES will be a change of $5 in value. The regular /ES would have a $50 change in value for every point move. For every 20 points that the S&P 500 climbs, the /MES contract will gain $100.

The Micro E-mini Nasdaq-100 ($MNQ)

The Micro E-mini Nasdaq-100 ($MNQ) contract follows the 100 non-financial companies on the Nasdaq exchange. It has the symbol $MNQ with a multiplier of $2, a minimum tick of 0.25 points an equal dollar value of this is $0.50.

A full one-point move in the /MNQ will equal $2 versus the standard /MQ. Which would be ten times greater at $20. 

You can check out futures when trading a NASDAQ stocks list. Make sure you check out the direction it’s heading. Especially when trading Micro Futures.

$MNQ

The Micro E Dow

The Micro E Dow contract follows the 30 Blue-chip stocks of the Dow Jones Industrial Average (DJIA). The symbol for the Micro E Dow is /MYM.

It has a multiplier of $0.50, a minimum tick of 1.0 points and thus the dollar equivalent of 1 point is also $0.50. A one-point move in the DJIA would move the /MYM $0.50 versus the standard /YM that would be ten times greater at $5.00.

Micro E mini Russell 2000

Finally, the Micro E mini Russell 2000 follows 2000 US small-cap stocks with a symbol of /M2K, a multiplier of $5.00, a minimum tick of 0.10 points.

Thus has a dollar equivalent of 0.1 ticks, which is equal to $0.50. A one-point move in the Russell 2000 will move the /M2K future $5.00 versus the standard /2K. Which would be ten times greater at a $50.00 move. 

Margin Trading

Traders can trade on margin for the Micro mini futures. Only having to put down between 5-7% of the total value as a deposit, magnifying both potential gains and losses with small moves in these indexes. 

Trading Micro Futures can help a lot with small accounts. In fact, learn how to get around the PDT rule.

In Summary 

All futures trading is risky and not for everyone. Which is way trading Micro Futures is great. Playing the Micro E minis is a way to get into the futures markets for these four major exchanges. All without having to risk too much money.  

As with all trading, you want to make sure that you are not over-invested. And only make trades with a reason behind them rather than on gut instinct. 

Micro E-mini futures contracts make the futures market more accessible to small investors. They take the Mini futures historic place, being tailored toward the current retail trader and investor, offering important benefits, including diversification, capital efficiency, risk management flexibility, and trading around the clock.  

With leverage, these products can help a trader see quick gains. But they’re putting taking on more risk as well. Micro minis can be exciting to trade, but as always, you need to be careful; Good Luck!!!! If you are considering using ThinkorSwim for trading be sure to take our full course and learn how to use thinkorswim

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