The S&P 500 is a stock index of 500 companies and well thought to be the benchmark index of US economy. It is made up of 400 industrial, 40 financial, 40 utility and 20 transportation companies. Bullish S&P 500 indicate that the US economy is doing well and Bearish movement indicates the opposite. If you invest in any sort of market, this index must be watched. It can be used to gauge the condition of overall market.

S&P 500 index is owned and maintained by Standard & Poor’s (S&P), which is a division of McGraw Hill. S&P 500 is part of two larger indices S&P 1200 and S&P Global 1500. The S&P 500 is a market value weighted index. Each stock’s weight in the index is proportionate to its market value.

The face value of an S&P 500 contract is $500 per point (each point has 4 ticks), S&P eMini  index point is 1/10th the size of the regular S&P 500 contract i.e. $50. The S&P 500 eMini can be traded online and is very popular among day traders. The lower margin makes the S&P 500 eMini a very good trading instrument for futures traders.

The ease of trading is another incentive that cannot be ignored; eMini can be traded from the comfort of your home and with as little as $2500 investment.

Some Historic Information:

Looking at the historic data it would appear that S&P 500 has been stronger between Nov and April as oppose to May and October period. Nov through Apr period outperformed May through October almost 70% of the time. Also, the worse month for S&P 500 had been the month of Sep.

Trading S&P 500 eMini :

eMini futures are traded as contracts rather than shares. The leverage acquired by trading eMini futures is huge. It is important to know that this leverage can work for you or against you.

What is Leverage?

This is how leverage works.

If I have a capital of $100 and make 20% of my capital, I would have made $20.

What if $100 gives me access to trade a futures contract worth $1000, with 20% return now I would have made $200. Isn’t this amazing!?

Trading eMinis Broken Down

Unlike stocks that are traded based on cents, eMini futures are traded on ticks. A tick is the minimum amount an eMini future can move up or down. The symbol for an eMini future is a little different than a stock ticker symbol too. An eMini symbol will look something like this ESZ09 or ES 12-09. The 'ES' stands for the S&P 500 eMini future. The 'Z' stands for the month in which the eMini contract will expire.

eMini Futures are available to trade virtually 24 hours a day. The market closes on Friday afternoon and re-opens on Sunday evening.

 There are Billions traded in eMini futures each and every day. It is quite possible to grab few hundred dollars every day to make a comfortable living.

 

The mini Russell 2000 Index (TF) is considered the benchmark to measure the performance of the small-cap segment of US equity market. Russell 2000 is a subset of Russell 3000 Index representing approximately 10% of the total market capitalization of that index.

Russell 2000 includes 2000 of the smallest securities based on a combination of their market cap and current index membership.

Symbol for Russell 2000 is TF and its value is set at $100 times the mini Russell 2000 futures price. The minimum price increment is 0.10 i.e. $10 per contract.

Average fluctuation for the past 52 weeks is 15 points however, there are no daily limits.

Trading example:
If you short sell one contract at 598.00 and the price drops to 597.00, you have a profit of $100. On the other hand if the price rises to 599.00, you have a loss of $100.00.

Compared to S&P 500 Index Russell 2000 appears to be quite volatile and moves very rapidly. Both indexes represent the US economy and usually go hand in hand. Since Russell 2000 is comprised of 2000 stocks, it is considered as a broad market index and leads the market.

You may notice that the divergence percentage between S&P 500, Russell 2000, Dow 30 and other indexes are very low. Should you notice a huge gap between them, it is a good indication that the market will follow the broad market index.