Eminis are futures contracts for various indexes, commodities and currencies. Eminis have their own trading personalities just as equities, and just as GOOG trades differently than WMT, each of the Emini contracts has their own trading personality profile.

There is no *right* market to trade just as there is no one trading style that meets the needs of all traders and market conditions. IMO one of the first keys to being a consistently profitable trader is knowing yourself, your own risk tolerance, strengths and weaknesses. Once you have that knowledge you can build a trading methodology and universe of trade assets that are aligned with who you are.

I trade both eminis and equities. However, I don’t trade all stocks nor do I trade all eminis.

Here are what I consider to be the strengths and weaknesses of eminis and equities.

Eminis:

Pros:

Leverage
Liquidity
~24Hour/Day market
No short selling limitations
Little or no slippage even for large trade size

Cons:

Emini markets are more price efficient so price volatility is lower.

There are only a handful of trade-able Eminis that meet my trading style. Days can go by when these assets are not “in play” or providing high probability reward to risk set ups.

Equities:

Pros:

“In play” stocks provide many more, high probability, high reward:risk intra-day trading opportunities than Eminis. Every single day there are many “in play” stocks and numerous high probability reward to risk set ups.

The universe of stocks that meet my trade criteria is much greater than Eminis.

Level 2 information, available in equities, gives an astute tape reader a valuable edge in their trading that’s not available to Emini traders.

Cons:

Less liquidity
Less leverage
Trading hours are limited.
Slippage has to be accounted for in risk management.

One of my main trading traits is risk aversion. So I align my trading with higher volume, liquid stocks/eminis that have clean charts and room to move from well defined inflections levels.

I also choose to trade those assets that are “in play” on any given day, assets with fresh news or some catalyst that sparks interest to move the asset with volume. I think of trading this way as “lower risk” volatility.

Every trading day there are equities that meet all my criteria so I trade equities a lot. However when Eminis are “in play” intra-day or for quality swing plays then I focus on these assets.

Personally, I prefer the way that Eminis trade so when they are “in play” that’s where you’ll find me trading.

written by: Bruss Bowman (former SMBU student)

no relevant positions