How to start trading e-mini futures
E-mini futures, or just e-minis, are enjoying an incredible popularity among small traders, the real "moms and pops" of the modern trading scene. To those new to the subject, e-minis are simply smaller-sized contracts of "full-grown" futures contracts that have been around for decades. Unlike the latter that have been traded on physical exchanges, the former have always been traded electronically, which explains what the "e" stands for.
It is not difficult to become an e-mini futures trader, although it can be much harder to become a consistently profitable one. There are only a few basic things one needs to do to start a career of an e-mini day trader. That's what most emini traders are: they are really day traders, which means they never hold their positions overnight, but finish their trading by the end of a daily trading session.
First, you open an account with an e-mini broker. There are many of them out there. Because of the great popularity of e-mini futures among small traders, these days even traditional stock brokers, such as Ameritrade, offer e-minis for trading. These brokers should be avoided though, as they charge relatively large commissions that can easily eat all your trading profits. Basically, any broker that does not offer at least $5 per round turn, should be avoided. The overwhelming majority of regular stock brokers are in this category, the only notable exceptions being Interactive Brokers and Tradestation Securities.
Some brokers offer better margins than others. That's also a very important thing to consider when choosing a broker. The smaller the margin, the more e-mini contracts you can trade and thus, assuming your trading has a positive edge, the more money you are likely to make. Some brokers offer margins as low as $500 per contract for intraday trading for most if not all e-mini products. Others are more conservative, but still offer discounts for day traders. Those are the two groups worth considering. It may happen that brokers who offer lower margins, charge more in commissions, although it is possible to find brokers who are good when it comes to both margins and commissions.
Once you opened an account, you need to fund it. Makes sure you have enough money to safely trade at least two contracts. The key word here is "safely." Suppose that your broker's intraday margin is $1500 per contract. Add $1000 to this as a cushion and you will come up with $2500 per contract to trade safely, meaning you would need at least $5000 to trade two emini contracts without getting overly stressed out.
Now, you only need to choose a solid trading platform. Most brokers offer NinjaTrader, a popular trading platform, and many others as well. If you a client of Interactive Brokers, you will be able to choose from among a few good trading platforms that in addition to NinjaTrader include Bracket Trader, Zeroline Trader, Button Trader, and a few others, lessser known.
Obviously, you also need to come up with a winning strategy and test it on a simulator before you commit your money, but that's another thing that goes beyond the scope of this article.