Trading Strategies  |  SEP 2004

The Call Me “Mini E” by Afshin Taghechian

V. 22:9 (92-95): The Call Me “Mini E” by Afshin Taghechian Well, actually, it’s e-mini, and this article has nothing to do with Dr. Evil. You might find it informative anyway, especially if you’re looking for a new instrument to trade. Since March 2000, when the stock market bubble burst, most equity traders have started to look into other trading and investment vehicles to profit from the market. Because the stock market rally lasted for so long — 18 years! — plenty of other market vehicles had been overlooked by investors and traders during that time. Now, these overlooked markets are attracting much more attention. One of the most successful financial products, and one that has experienced impressive growth in the past few years, is the e-mini stock index futures. That’s right, the e-mini indexes. It’s been six years since the e-mini “craze” began, and today it’s no longer a craze, but a boon to a variety of traders who may not have the wherewithal to trade individual stocks but want to look at the broader market on a more limited basis. The Chicago Mercantile Exchange (CME), Standard & Poor’s, and Nasdaq e-minis are the hottest things going, with the Chicago Board of Trade (CBOT) mini-Dow coming along nicely, based on the same concept. Unmatched for consistent volatility and the tops in liquidity, these markets are gold mines for the trader looking for a real opportunity to trade profitably again. SELECTING A MARKET VEHICLE For short-term trading, finding the right market vehicle is an important step. E-mini stock index futures have become popular trading vehicles in the past few years because they have certain prized characteristics that other markets just don’t have, at least not all together at the same time and in the same market. Even if you had total freedom to design the ideal market for short-term trading, your dream market would probably fall short of what e-mini indexes offer.

by Adrienne Laris Toghraie