Practice With Mini Micro Futures and Trading Emotions

By Chris on 2013-07-11 in E-mini Trading (0) Comments

Practice With Mini Micro Futures and Trading Emotions

Money is money and you have to understand that before you read on about mini micro futures. This instrument in my opinion is a nice way to work on getting your feet wet in the trading the financial futures market. As you'll read shortly it's also a nice way to work on testing your new strategy and implementation. As I said before, it's important to understand that the M6E is real money. Everything that can happen to you trading the bigs' can happen to you here. So the same caution yielded when trading any financial instrument should be in place.

The M6E Micro Futures Breakdown

I'm going to break down an instrument I've been using at night to try and workout longer term overnight buy and hold plays in the Euro. The instrument is the mini-micro futures which is an even further derivative of the e-mini contract. Specifically the symbol that I'm referring to is the M6E and I'm sure it is the same or close across the board. The M6E is the micro version of the 6E Euro FX contract.

The activity within the M6E is what you can expect from an instrument that has little volume. A lot of multiple tick jumps in price and the occasional bad fill. These characteristics are simply a result of lack of real volume. Occasionally this affects a trade, but for the most part the M6E moves right along with the 6E. The M6E based on a quick look does have the most daily volume today, but this can change based on the time you read this. I have never touched any other micro contract outside of the Micro Euro.

Why I Like the Mini Micro Futures

The reason I say this may be a good idea for a beginner trader is the first "real" trade you make can be overwhelming. You don't really realize the full effect of the market until it takes a bite out of your account. Some think they may be able to handle their emotions then soon realize they need some work. So easing into the market in my opinion makes sense.

It also makes sense to me as an intermediary step between your chosen SIM period and the real thing. It makes sense to me for one glaring reason. The very fact that it is real trading I'll be it with a little less of a punch.

Now, I'm really not afraid of sounding like a broken record here and taking a break to say it again. I bring it up the fact that the M6E is real money and should be treated as such.

The tick value of each tick is only $1.25. So for me an 8-10 tick stop is only $10-$12.50 rather than the 6E($12.50) $100-$125. To me this is a better substitute to working a strategy on SIM where emotions play no role in efficiency. I always talk about the idea that sometimes emotions are more important to me than strategy itself. So having emotions play a role in strategy development and practice is the only route I am willing to choose.

If I Was New To Trading the Futures

So if I was coming in new to the market again and I knew about an instrument like the micro futures I think I may have dabbled here before I hit the bigs'. You can make progress in your account, but the gains are small if you're simply trying to scalp the market. It may not even be worth it if I was looking for only a few ticks, but for some of the longer term overnight plays where I'm looking for 50-80 ticks the Euro mirco mini futures are worth the effort.

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FULL RISK DISCLOSURE: Futures trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.



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