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Thursday
Nov252010

emini vs other forms of trading

Why is trading eminis attractive vs other forms of trading?

DeWayne's trading Tips The three major differences between trading eminis vs other forms of stock trading are the amount required to trade, the ease of selling the stocks you have bought (liquidity) and the financial risks of trading.

With regular stocks vs emini stocks you might buy a stock and not be able to sell it (the regular stock is "illiquid").

If, for example, you trade the S&P emini - it is a very liquid market and (in normal market conditions) there are always buyers and sellers eager to take your trade for the emini stock.

What is $$ required to trade eminis vs other forms of trading?

A US-based daytrader in regular stocks is required to maintain a minimum balance of $25k US by the SEC. With an emini account you can day-trade with as little as $3k.

What are the risks of emini trading vs other forms of trading?

In regular trading you are usually trading selected stocks. With, for example, the S&P emini you are trading a basket of 500 stocks. With emini trading, if one ceo runs off with the money it doesn't skew the results, so your risk is reduced. With emini trading vs other forms of trading, there are no pump and dump schemes or front running in emini markets.

What are the rewards of emini trading vs other forms of trading?

In emini trading vs other forms of trading there is controlled use of margin. In emini trading, this means you can put on a trade with $500, risk only $100, and earn $100 in just a matter of minutes compared to the slower returns and illiquidity of regular stocks or real estate.

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