6 Benefits of Emini Trading for Full Time Income
The E-Mini is a futures contract that tracks the SP500 broad market index. If you remove the ‘5’ from the SP500 it will read “SP00”, which is another nickname the futures go by.
So what makes the “spoo’s” an attractive futures contract to day trade for full time income?
If you want to learn about day trading for a living, you can read our full guide here >
Let me take you through a list of benefits for emini trading.
1) EMini Trading – King of Liquidity (Why That’s Important to YOU)
As a trader you want to be sure that when it’s time to sell your position there is someone that is ready and willing to buy it from you.
The availability of buyers and sellers in a market place is referred to the concept of liquidity. The larger size you can offload near the current market price, the more liquid the contract is.
How deep is the emini?
There are over 1.6 million contracts traded on a daily basis!
You can see from the chart below that only 10 year notes come close, with the rest of contracts dropping off significantly.
Liquidity is very important because no matter how successful you become as a day trader you will not eat up a majority of the liquidity.
Weather you are trading 5 futures contracts or 15, you’ll likely be filed at the same price.
You are more likely to max out your psychological limit than the market availability as an independent day trader.
What this means is that emini trading can be very scale-able and a great product to learn day trading with.
2) Emini Trading – Transparent and Regulated Marketplace (Order Flow Analytics are Accurate)
The spoos are traded on a heavily regulated and transparent market place. All trades are recorded and transacted through the Chicago Mercantile Exchange Group.
CME publishes official time and sales data that is accurate and reliable. This makes the use of order flow analysis very profitable and useful!
Imagine having access to data that shows where there are open shorts and current buyers like the chart below?
You can see where the buyers will act as support, and where short sellers will scramble to cover their trade.
Learn how to conduct order flow analysis in our day trader pro package here and learn to be a professional trader.
There are no market makers or trading pits. All traders have access to the same data which makes it a level playing field.
Other markets are like FOREX are very liquid, but are not regulated and there is no official data available for trade settlements and clearing.
This alone is a massive benefit of emini trading.
3) Emini Trading – Amazing Leverage is a Huge Benefit (When Used Wisely)
You can control one contract for as little as $500 margin. Each contract is valued at 100 x the index price.
This means that with just $500 you can control $255,200 USD (currently). That is a whopping 500:1 levarage.
While this means that day trading with a small account can be enough to earn a full time income, it can also mean that you can easily blow that account up.
Assuming you own 1 contract on the SP500 futures, you will either earn or lose $50 for each point the index moves.
In other words, if the market moves 10 points against you there will be a $500 loss!
To the trained and disciplined day trader however, a 10 point move in your favor will amount to a $500 gain. Imagine making $500 return on $500 margin? That’s 100% in a day and might even sound crazy to some people, but while it’s not probable it is in fact possible.
The truth is that it does not take more money than you likely already have to be a profitable day trader.
It just takes the right skill, discipline and solid money management techniques. We teach you all of this and more in our day trader course here.
Leverage in a market is a benefit that serves the most disciplined traders and ruins the rest.
4) Emini Trading – No Pattern Day Trader Rule
In the United States you need to have $25,000 USD of capital if you execute 4 or more trades in the span of 5 days.
If you buy a stock and sell it, that’s two trades of your total 4. That’s not a very active trader.
In today’s markets you can find multiple high probability trades on a daily basis.
When emini trading you are not exposed to this pattern day trader rule.
You can trade as little or as much as you’d like, and you do not need to have $25,000 USD in capital.
5) Emini Trading – Very Technical Market Driven by Order Flow
The best news for an aspiring day trader or anyone planning to try emini trading is that it provides ample opportunity to profit on a daily basis.
Using the right order flow anlaysis tools and strategy, you can find multiple profitable trades daily.
In fact, in our day trading room we only trade for two hours because that’s all it takes on a daily basis to earn a full time income.
Because the SP500 futures are an auction market on a transparent exchange you can follow the large institutional traders and profit with them. You can see all the trades that go through and identify when reversals will happen, where traders are stuck and much more.
6) Emini Trading – Favorable Tax Consideration
This one is last on the list because it varies according to where you live.
You will want to ask your accountant or tax professional for advice before taking any further action.
However, in my country you can opt to list your trading profits as capital gains instead of income. This means only 50% of your profits are actually taxed, as opposed to the full 100% that is taxed on income.
There are differences on what you choose and many factors go into choosing what’s right for you.
However I would encourage you to call your tax professional for more information. This one benefit alone can save you tens of thousands of dollars a year!
Emini Trading – Conclusion
Emini trading can be very lucrative, and this futures contract should be part of every day trader’s tool kit.
The market is very deep, volatile and easily accessible for the independent day trader.
Despite all of these benefits, this can also be the hardest market to trade for the untrained amateur.
Whether you plan on emini trading or any other market it is very important you invest in yourself and in an education that will help you gain an edge as a trader.
You will learn things you didn’t know existed, because they work!
The education is the same as what you would learn at a proprietary trading firm.
The information contained in this post is solely for educational purposes, and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable to your own financial situation. TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities.