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What is Emini Futures Trading?

By A. Leverkuhn
Updated Feb 06, 2024
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Emini futures trading is the practice of investing in emini futures products that mimic the price rises and falls of traditional futures contracts. Like futures contracts, emini futures are based on the prices of commodities. Unlike traditional futures contracts, emini futures require little capital to participate, and are often traded more like stocks than like some other kinds of commodity plays.

The financial products known as emini futures are based on the prices of a specific commodity. Commodities are physical products that have values in certain global commodity markets. For example, gold and silver are precious metals commodities, wood and coal are raw materials commodities, and coffee and corn are agricultural commodities. Emini futures trading involves financial instruments that are based on indices in national or regional markets.

Traditional future contracts are traded though commodities exchanges, but emini futures trading can take place over other kinds of exchanges. Where futures contracts emerged as a way for farmers and other to make agreements about a future delivery price, emini futures products are specifically designed to help speculators invest in physical commodities without a lot of restriction on buying and selling.

A formal agreement is required with traditional futures contracts on future prices, a period of time before expiration, and other restrictions. Emini futures trading involves very little of this kind of financial activity. Emini futures products can be leveraged to provide price changes based on price rises and falls for the underlying commodity, without really being “tied" to that commodity in a classic sense. For example, emini futures products that are based on gold do not necessitate the kinds of paperwork that traders would have to deal with in the traditional gold futures market.

Traders use tools like stop loss options, profit taking strategies, and diversification to help limit risk in emini futures trading. This kind of investment practice can also be done without a high margin. The margin is the amount of money needed to participate in some kinds of commodities trading. Emini futures have a relatively low margin, which makes them accessible to a larger community of investors. Traders can also practice the principle of consolidation by buying into a single emini futures instrument that contains various elements, rather than trying to hold dozens of equities or classical futures contracts for gains. Simplifying paperwork and tracking is a major bonus for many investors who cannot handle a more intricate portfolio.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.

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