Describes Emini S&P 500 Trading and Emini Emini S&P 500 Daytrading

The E-mini S&P 500 Futures Trading [CME.com]

The CME E-mini S&P 500 futures closely tracks the price movement of the S&P 500 Index. Since the S&P 500 Index tends to move very similar to the Dow Jones Industrial Index, it's an excellent trading instrument for to trade using the Dow Indicator trade recommendations. If you expect the S&P 500 Index to move up then you would buy a contract of S&P 500 E-mini futures. Inversely, if you expect the S&P 500 Index to move down then you would sell a contract of S&P 500 E-mini futures. The S&P 500 E-mini futures contract is an ideal means to swing trade.

The S&P 500 E-mini futures trade in March, June, September, and December contracts. More than 1 million contracts traded on average per day in 2006, making it one of the most highly-traded futures contracts in the world.

Benefits

Fast, efficient way to trade the benchmark S&P 500 Index (and the underlying 500 large-cap U.S. issues) with a single contract
Smaller contract well-suited for a broad range of individual and institutional customer needs
Substantial liquidity and tight bid/ask spreads
Electronically traded on the CME Globex® platform, offering speed, reliability, anonymity and trading around the clock, around the world
Accommodates a variety of strategies such as hedging to protect against adverse price moves, spreading with other stock-index futures and gaining broad market exposure
Level playing field from open, fair and transparent markets
Potentially lower trading costs than trading a basket of equities or ETFs

The contract value of each S&P 500 E-mini futures determines your market exposure. To determine contract value, simply multiple the current value of the S&P 500 E-mini futures price with $50 (the contract’s multiplier). If the S&P 500 E-mini futures is trading at 1440 then the value of the contract is $72,000.

Futures contracts move in ticks (the minimum price fluctuation specified by the exchange). The minimum tick size for the S&P 500 E-mini futures 0.25 point, which is valued at $12.50; therefore, if the price moves up 1 point the value of the contract will appreciate $50. If the S&P 500 E-mini is trading at 1440 the value of the contract will be $72,000 (1440 x $50), and if S&P 500 E-mini moves up by 10 points to 1450 the value of the contract will increase to $72,500 (1450 x $50), a $500 profit.

The front month of E-mini contracts are liquid, so it is easy to get in and out of them within seconds. The average daily volume as of November 2007 is about 2,500,000 contracts.

Since each contract has an expiration date, they expire. The S&P 500 E-mini contracts expire the third Friday of the contract month. March contract expires the third Friday of March, and the June contract expires the third Friday of June. Check with CME Exchange to find out when contracts expire and more by clicking 'Here'.

The S&P 500 futures contracts are traded by both open auction on the exchange floor, and electronically. The larger S&P 500 contract is traded via open auction during the day and electronically at night. The S&P 500 E-mini trades fully electronically, virtually all day long. (23 hours, 15 minutes) Usually, the fills for electronic trading take only a second.

Futures are traded through a brokerage firm. Commissions depend on the amount of assistance you want from a broker. The S&P 500 E-mini can be electronically traded via internet for as little as $2.50 per side including exchange fees ($5 round turn).

Futures contracts are highly leveraged trading vehicles. They allow you to gain maximum exposure in the market at minimum cost. You can buy or sell a S&P 500 E-mini futures contract of a deposit of approximately 4 to 7 percent of the value of that contract. When you first place a futures order, the amount you must deposit in your account is called initial margin. After you have posted initial margin and have started trading, you must maintain a minimum margin balance in you futures account called maintenance margin. If the margin balance in your futures account falls beneath the maintenance level, you will receive a margin call that requires you to add additional money to your account to bring it back up to the initial margin level. If you are unable to fulfill a margin call, your position will be liquidated, and the margin money will be collected.

Tax Advantage
For stocks held less than one year (short-term capital gains) and investor would have to pay based on his/her tax bracket, ordinary income rate. With futures, an individual would most likely have to pay a lower tax rate because of the IRS 60/40 rule. Under this rule, 60 percent of any gains on futures positions would be taxed at a more favorable rate while 40 percent would be taxed at ordinary income rate. For information on the tax treatment afforded different trading strategies, please consult a tax advisor.