E-mini and Micro E-mini Futures Contracts Explained

Date Modified: 14/05/2023

For traders and investors seeking to enter the Futures market without having to commit a large sum of money, E-Mini and Micro E-Mini Futures may be the answer. Here’s what you need to know about E-Mini and Micro E-Mini Futures contracts:

E-mini and Micro E-mini Trading

What Is an E-Mini Contract?

E-Mini Futures are electronic contracts that are a fraction of the size of a standard Futures contract. Like Futures contracts, E-Minis also provide traders with access to a plethora of financial markets ranging from Indexes to Interest Rates and Forex. Furthermore, E-Mini Futures are mainly traded on the Chicago Mercantile Exchange (CME) which is one of the biggest and most prominent Futures exchanges in the world.

Why Did E-Mini Contracts Emerge?

Because of the fact that Futures contracts are large and often traded by institutional investors, in 1997, CME created E-Mini Futures in order to provide more affordable access to financial markets for smaller investors. The first E-Mini Futures contract provided exposure to the S&P 500 Index. However, over time, these types of Futures became popularized and nowadays they offer access to equity Indexes, Commodities, and Forex. Moreover, E-Mini contracts are considered some of the most traded Futures on the Chicago Mercantile Exchange (CME). On Plus500’s Futures trading platform, traders may access Chicago Mercantile Exchange’s (CME) E-Mini contracts.

How Do Micro E-mini Contracts Work?

E-Mini Futures work similarly to standard Futures contracts in that they too are an agreement between a buyer and seller to transact a certain financial asset at a predetermined time and quantity in the future. However, the key difference between E-Minis and standard Futures is that the former is one-fifth of the latter’s value and can be accessed by smaller investors. In addition, E-Minis allow investors to leverage their returns if the prices of the underlying asset go well with their position and potentially hedge against price fluctuations.

What Are Micro E-Mini Contracts and Why Did They Emerge?

Micro E-Mini Futures are smaller-sized versions of E-Mini Futures and as such are considered more affordable. CME launched this type of Futures contract in 2019 in response to the fact that some E-Mini Futures became expensive to some investors. Furthermore, according to CME, since their launch in 2019, trading big benchmark Indexes like the Dow Jones Industrial Average, S&P 500, Nasdaq 100, and Russell 2000 has become easier thanks to Micro E-Minis.

What's the Difference Between an E-mini and a Micro E-mini Futures Contract?

The difference between E-Mini and Micro E-Mini Futures is that the latter is one-tenth the size of the former and is, as such, more affordable. Furthermore, Micro contracts provide traders with more flexibility and allow them to manage risks more precisely.

Types of Micro and E-Mini Futures

Micro Crypto Contracts

The Crypto market is definitely among the most popular markets out there, with Bitcoin and Ethereum being the most famous of all Cryptocurrencies. But this market is also volatile and can be risky. For example, usually, Cryptocurrency traders who own Cryptocurrencies, and have to worry about finding a safe Crypto wallet to store the Cryptocurrencies away from hacking attempts. In addition, they’d have to actually own the Cryptocurrency.

Alternatively, to access the Crypto market without having to own the actual Cryptocurrencies or worry about finding wallets to store them, trading micro Cryptocurrency Futures which are tenth the size of an individual Cryptocurrency may be the answer. Furthermore, crypto futures allow investors to speculate on the future price of cryptocurrencies. With Plus500’s offered Micro Bitcoin and Micro Ethereum contracts, traders may be able to manage their risks more effectively while gaining exposure to the Crypto market.

Micro & Mini FX Contracts

The Forex market is deemed the most liquid and traded market in the world. In a way, every individual has participated in this market in one way or another, whether through currency transactions or purchasing certain goods. One way to access the Forex market is through Micro & Mini FX contracts which allow traders to potentially benefit from Forex price swings without owning the Forex pair in question. In addition, Micro & Mini FX contracts are affordable means of gaining exposure to major currency pairs like the EUR/USD without having to commit a large sum of money.

Micro & Mini Equity Index Contracts

Micro and E-Mini Equity Index contracts are cost-effective ways to gain exposure to some of Wall Street’s biggest benchmark Indexes like the S&P 500 and the Nasdaq-100 which include within them some of the biggest and most prominent companies in the world. Interestingly, the first E-Mini Futures contract was an E-Mini S&P 500 contract. Moreover, while E-Mini contracts are affordable ways to access Indexes, Micro E-Minis are even more affordable.

How Much Money Do You Need to Trade E-mini Futures?

On Plus500’s Futures platform, you can start trading Futures contracts for low and attractive fees. Alternatively, you may trade for free with Plus500’s free & unlimited demo account until you feel ready to test Futures trading for real.

Pros and Cons of Micro and E-Mini Futures

Pros

One of the obvious pros of E-Mini and Micro E-Mini Futures is probably the fact that they’re affordable and provide access to various potentially lucrative financial markets. In addition, these types of contracts allow traders to diversify their portfolios for a lower amount of money. Moreover, these types of contracts are traded almost 24 hours a day.

Cons

Among some of the downsides of Micro E-Mini and E-Mini Futures are that you may potentially lose money if the prices of the underlying assets go against the prices you set when the contract opened. Additionally, while these contracts’ 24 hours a day availability may be advantageous it may also mean that some traders would end up opening more positions than they can handle which may increase the potential of incurring losses.

To Conclude

Micro and Micro E-Mini Futures are electronically traded Futures that are a fraction of the price standard Futures contacts. Accordingly, these contracts allow traders access to a myriad of financial markets for less amount of capital, and Plus500 traders may trade these and diversify their portfolios accordingly.