The ultimate guide to CME Micro contracts: MES, MNQ, M2K, MYM.
Or how trading Futures became affordable for all traders.

Let’s clarify briefly how do S&P500 Futures work and make our way into the e-mini and micro!

The S&P500 Futures are derivative contracts based on the S&P500 Index value, and are offered solely by the CME Group (Chicago Mercantile Exchange), until now in two versions:

  • the ‘big contract’ (introduced in 1982) with the ticker symbol SP which is priced at $250, multiplied for the market value of the future contract, let say for simplicity 2,500 (as of today is closer to 2800 though) = $625,000. Just a bit pricey!
  • and the e-mini contract (introduced in 1997) offered with the ticker symbol of ES, priced at 1/5 of the original contract therefore $50; the market value obviously remains the same, since that is what’s based upon, hence $50 * 2,500 = $125,000. A bit better!

E-minis, or Electronic mini, have been created in 1997, the dawn of electronic trading, to allow for smaller investments by a much wider range of investors and traders, in a range of indexes as the Nasdaq 100, S&P 500, Dow Jones and Russell 2000, as well as commodities such as gold and currencies such as the euro.

  • the MASSIVE NEWS here is that from May 2019 CME will offer also the Micro e-mini contract, with the ticker symbol of MES,  prices at 1/10th of the e-mini, therefore $5 and a contract value of $12,500. Now that’s affordable!!!
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Furthermore CME have announced that they will create Micro E-mini corresponding to:

S&P500, hence Micro ES = MES

NASDAQ-100, hence Micro NQ = MNQ

RUSSELL 2000, hence Micro RTY = M2K

DOW JONES, hence Micro E-mini DJIA = MYM

I’ve refrained myself until now from trading Nasdaq and Dow Jones because of their high volatility! But in becoming more affordable I believe that I will be able to trade a few Micro without breaking the bank!

It’s like having the possibility of trading half a contract, or a quarter! Haven’t you ever wished that?

How much money I need to trade the E-mini?

Keep in mind that no trader is expected to cash out over half a mil $ to trade 1 contract of course, instead traders are only required to front a fraction of the contract value to take a position called the margin.

The margin for the Mini ES for example is set by CME as of today at 6,000$.

 

I help you here in calculating how many contracts you can trade with the account provided by the Funder!

In The Gauntlet by Earn2trade (here is how I won and got funded!) with a $25,000 account you can trade:

2 contracts of Mini ES = 2 * 6,000 = $ 12,000

+

2 contracts of Mini Gold GC = 2 * 3,400 = $ 6,800

total = $18,800, well below the max allowed by my account.

 

In the Challenge by Savius with a $20,000 account you can trade 3 contracts, why?

3 contracts of Mini ES = 3 * 6,000 = $ 18,000

So what about the Micro E-minis?

These contracts are still subject to approval, and this hasn’t obviously been announced as yet, but we can easily assume that the margin will be 1/10 of the e-mini ES, so:

$6,000 / 10 = $600, affordable right?!

I believe that this will open the world of Futures trading to the whole wide world of traders who until now focused solely on Forex exactly because of its affordability.

Consequently, with all the info gathered above here, we can also calculate what will the value of a tick in a Micro e-mini right?

So here we go,

for S&P500:

E-mini ES 1 point is worth $50, and with 0.25 ticks increment, each tick : $50/4=$12,50

Micro MES is worth $5, still at 0.25 ticks increment, each tick : $5/4=$1,25

for NASDAQ 100

E-mini NQ 1 point is worth $20, and with 0.25 ticks increment, each tick : $20/4=$ 5,00

Micro MNQ is worth $2, still at 0.25 ticks increment, each tick: $2/4=$ 0,50

for RUSSELL 2000

E-mini RTY 1 point is worth $50, and with 0.10 ticks increment, each tick: $50/10=$ 5,00

Micro M2K is worth $5, still at 0.10 ticks increment, each tick: $5/10=$ 0,50

for DOW JONES

E-mini YM 1 point is worth $ 5, and with 1 tick increment, each tick = $ 5,00

Micro MYM is worth $ 0,50, still at 1 ticks increment, each tick = $ 0,50

This becomes much easier to manage for the individual trader!

“Futures trading has been growing in popularity for active traders all over the world,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products. “The smaller contract size of Micro E-mini equity index futures will make it easier to more nimbly execute a variety of equity trading strategies, while benefiting from the deep liquidity that CME Group markets offer around the clock.”

“More active traders are participating in the futures market than ever before. In 2018, CME Group’s non-institutional trading business grew 27 percent compared to the previous year, with active traders averaging 660,000 contracts each day. Globally, active trader participation in CME Group markets grew 30 percent in Asia and 36 percent in Europe last year.”

I’m confident and I look forward to have the Funders offering also MES in their challenges!

I will most certainly keep you posted on developments!

Thanks Buddy!

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