Any advantage to trading Eminis vs spiders?
- Thread starter Nofear777
- Start date
EMini's, the good:
Greater leverage.
Lower daytrade margins.
EMini's, the bad:
Greater leverage.
Lower daytrade margins.
EMini's do offer better tax treatment.
If you've been trading SPY for a while and want to get your feet wet, I recommend setting up a SIM acct that uses a real time data feed . Run it alongside your current setup and get a feel for it's price movement and reaction to times/events as compared to the intruments you are familiar with.
Best of luck to you!
Greater leverage.
Lower daytrade margins.
EMini's, the bad:
Greater leverage.
Lower daytrade margins.
EMini's do offer better tax treatment.
If you've been trading SPY for a while and want to get your feet wet, I recommend setting up a SIM acct that uses a real time data feed . Run it alongside your current setup and get a feel for it's price movement and reaction to times/events as compared to the intruments you are familiar with.
Best of luck to you!
A few other differences:
1) the spread
for ES the spread is typically 0.25 points or about 0.0230%
for SPY the spread is typically 1 cent or about 0.0091%
2) commissions and fees
commissions and fees vary based on security (futures vs equities), broker, exchange, software etc
3) rebates
you may get rebates for adding liquidity for SPY trades. I'm not aware of any rebates available for adding liquidity to ES.
1) the spread
for ES the spread is typically 0.25 points or about 0.0230%
for SPY the spread is typically 1 cent or about 0.0091%
2) commissions and fees
commissions and fees vary based on security (futures vs equities), broker, exchange, software etc
3) rebates
you may get rebates for adding liquidity for SPY trades. I'm not aware of any rebates available for adding liquidity to ES.
Emini futures are very popular with traders these days, and its true you'll get better tax rates and leverage, but the downside of trading the Emini's, when you look at your total costs, trading the SPY is alot cheaper.
Heres the breakdown:
Every 4 ticks (or 1 point) on the ES = 10 Cents on the SPY.
So 1 tick on the ES = 2 ½ cents on the SPY.
This means every time you make a trade with the ES, the market has to move an extra 1 ½ cents to cover the spread (before you can even think about making a profit on the trade).
Then theres commissions, trading the SPY, its like a stock, you can have a fixed commission with unlimited shares per trade. With futures you have to pay a seprate commisson for each contract (usually about $4 roundtrip).
Heres an example of a trade with the SPY:
You buy 5000 Shares at $110.50, the price has to move to $110.71 for you to make 2 points ($1000) on your trade.
Your commission is $14 roundtrip ($7 + $7) so your total profit is $986.
Heres an example of the same trade with the ES:
You buy 10 contracts at 1100.50, the price has to move (9 ticks) to 1102.75 (thats $110.50 to $110.73 on the SPY) for you to make 2 points ($1000) on your trade.
Your commission is $40 roundtrip (10 X $4) so your total profit is $960.
Heres the breakdown:
Every 4 ticks (or 1 point) on the ES = 10 Cents on the SPY.
So 1 tick on the ES = 2 ½ cents on the SPY.
This means every time you make a trade with the ES, the market has to move an extra 1 ½ cents to cover the spread (before you can even think about making a profit on the trade).
Then theres commissions, trading the SPY, its like a stock, you can have a fixed commission with unlimited shares per trade. With futures you have to pay a seprate commisson for each contract (usually about $4 roundtrip).
Heres an example of a trade with the SPY:
You buy 5000 Shares at $110.50, the price has to move to $110.71 for you to make 2 points ($1000) on your trade.
Your commission is $14 roundtrip ($7 + $7) so your total profit is $986.
Heres an example of the same trade with the ES:
You buy 10 contracts at 1100.50, the price has to move (9 ticks) to 1102.75 (thats $110.50 to $110.73 on the SPY) for you to make 2 points ($1000) on your trade.
Your commission is $40 roundtrip (10 X $4) so your total profit is $960.
Wow...where do you begin? Only adv to trading spy is not as costly to hold overnight..u can trade 1 ES at 500 daytrade margin..do math
Thanks all. I think Ill stick with spiders after PCP's post.
What I was really worried about is that as an etf, spiders dont have the same movements that eminis would (being and etf, and having dividends).
But it seems to even up on the commissions side.
Leverage is important but I dont have problems with leverage right now. Commissions and cost of trading trump it leverage for me.
What I was really worried about is that as an etf, spiders dont have the same movements that eminis would (being and etf, and having dividends).
But it seems to even up on the commissions side.
Leverage is important but I dont have problems with leverage right now. Commissions and cost of trading trump it leverage for me.
i would imagine the tax advantages offset the spread & commission differences if you are profitable
if you aren't consistently profitable, SPY is probably better until that point for the reasons already mentioned.
if you aren't consistently profitable, SPY is probably better until that point for the reasons already mentioned.
I disagree that a larger spread is a disadvantage. I like having a thick order book. I would love it if they increased the tick size in Gold and crude oil, for example. I hate these contracts with huge volume but that have no size on the best bid/best offer.
Incy, dont you get it yet? How many times have you had to fund your futures account now because you keep trying to daytrade futures on very small margin?
I say if you dont have a consistently profitable system, being able to trade 1 lot on $500 is a huge disadvantage, it is distorting reality. For someone still cutting their teeth the spiders seem like a more logical choice. A 100 share SPY trade is more forgiving than a 1 lot ES trade.