How to Trade ES Futures

by Tim Plaehn ; Updated July 27, 2017

ES is the ticker symbol for the e-mini S&P 500 futures contract. The e-mini S&P 500 futures contract is a popular choice for traders who want to trade the direction of the S&P 500 stock index. E-mini futures contracts offer a high degree of leverage to multiply profits and low trading costs. A futures broker can help a new trader get set up with the right software package and provide training and seminars.

Step 1

Open an account with a broker registered with the Commodity Futures Trading Commission (CTFC). Some stock brokers also offer futures trading, but many futures brokers are exclusive to commodity and futures trading. Dedicated futures brokers may provide more individual help and guidance.

Step 2

Download and install futures trading software from your futures broker. Brokers may offer several different proprietary and third-party software packages. The broker's representative can help select the most appropriate software and assist with the set up.

Step 3

Practice trading ES using the simulated money trading account provided by the broker. Your software should include a practice trading account with live price information. Use the practice account to learn the software and develop your trading strategy.

Step 4

Switch to your live money trading account when you you are consistently profitable trading the e-mini futures in you practice account. You must make a margin deposit for each contract traded. In November 2010, the margin requirement for ES trading was $5,625 per contract.

Tips

  • Futures prices change in "ticks." For the e-mini S&P 500, each tick is equal to a quarter-point change in the S&P 500 stock index, and a tick is worth $12.50. If the S&P 500 gains or loses two points, that would be eight ticks and a profit or loss of $100 per contract. Futures traders can open a trade with either a buy or sell order. A buy or long open profits if the stock index goes up. A sell or short open is to profit from a declining S&P 500. An opposite sell or buy closes the position.

Warnings

  • Futures trading is highly leveraged trading, and a trader can lose a significant amount of money in a short period of time. Beginning traders should trade only with money they can afford to lose.

About the Author

Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.

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