What Is E-Mini Forex Day Trading?
Day trading is the trading of investment securities with a holding period of one day or less. The e-mini Forex contracts are popular day trading vehicles. Traders with small account balances can trade these contracts.
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Identification
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A majority of Forex trading is done through unregulated banks and brokers. The e-mini contracts are offered by the Chicago Mercantile Exchange and trade on markets regulated by the U.S. Commodity Futures Trading Commission. E-mini Forex contracts are available for the Euro to U.S. Dollar--EUR/USD--currency exchange and the Japanese Yen to dollar--JPY/USD--trading pair.
Size
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The e-mini JPY/USD contract has a value of 6,250,000 yen and a day-trading initial margin of $1,400. The EUR/USD contract is for 62,500 euros and the day-trading deposit requirement is $1,250.
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Potential
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E-mini Forex contracts have a value change of $6.25 per tick. There are 100 ticks in a cent, so a one-cent change in the value of the currency will result in a $625 profit or loss.
Considerations
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Stock market day trading requires a minimum account balance of $25,000. Unregulated Forex brokers will allow trading with $1,000 or less. Most commodity brokers that offer e-mini contract trading require a $5,000 account balance.
Warning
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All futures trading brokers will warn traders that trading can result in significant losses exceeding the amount invested. Trading should be done only with money that investors can afford to lose.
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References
- Photo Credit currency image by peter Hires Images from Fotolia.com
