StoneX®

Trade Futures, Spreads and Options with Confidence.

 

Technical Strategies for Trading ES Futures in Live Time

by | Futures 101

The Chicago Mercantile Exchange is the largest futures and options marketplace in the world. The CME facilitates the trade of nearly everything under the sun, from corn and gold to weather and real estate indices. Among its most popular offerings is the E-mini S&P (ES) 500.

ES futures are located in the equities index portion of the CME’s vast catalogue of offerings. They stand side by side with the E-mini DOW, E-mini NASDAQ, and E-mini Russell 2000. If you’re a large-, mid-, or small-cap equities trader, the CME has a futures contract tailored to your expertise.

Strategies for Trading ES Futures in Live Time

Featuring consistent liquidity and volatility, the E-mini S&P 500 is the most frequently traded futures contract in the world. The robust participation ensures second-to-none market depth―a coveted attribute for day and swing traders alike. Because of this key benefit, many market technicians focus their efforts on trading ES futures in live time every day.

Scalping Strategies for the ES

By definition, scalping is a short-term strategy in which small profits are taken repeatedly to secure market share. With a scalping methodology, a quantifiable edge is applied over time, with risk and reward being kept on a tight leash.

Although there are many scalping strategies, here are two that many traders use with the E-mini S&P 500:

  • Trading the opening and closing bells: When the Wall Street cash open and the cash close occur, there is typically a flurry of action in ES futures. The added participation generates enhanced order flow. Accordingly, scalpers capitalize on the momentum by buying or selling in reference to various technical indicators and tools.
  •       Support and resistance levels: Support and resistance levels are technical barriers that act to constrain pricing fluctuations. Scalpers often take positions opposite short-term price action from such levels, looking for an immediate adverse reaction in price.

In order to scalp successfully, you need specific market conditions to work with. Trade efficiency is of utmost importance because slippage and wide bid/ask spreads make the strategy largely a nonstarter. Those trading ES futures in live time benefit from consistently strong market depth, so scalpers often gravitate toward the front-month E-mini S&P 500 contract.

Watch our on-demand webinar A Modern Take on Volume Analysis and Market Profile in Futures Markets >>

Day Trading the ES

The public nature of the S&P 500 draws interest from retail and institutional traders around the globe. As a result, intraday trends and reversals are common. Whereas scalpers are drawn to the E-mini S&P 500 because of enhanced market depth, day traders seek to capitalize upon the inherent volatility.

Here are two strategies for day trading ES futures in live time:

  • Event-driven: In anticipation of a news item driving price directionally, day traders will buy or sell upon the market’s open from technically relevant areas. The use of oscillators is common in this strategy because determining whether a market is overbought or oversold is the key to entry.
  • Retracement entry: Getting in on an established intraday trend is a popular day trading approach. This means that a trader must buy or sell from a pullback or retracement in price. This is accomplished through the use of such technological tools as market profile and Fibonacci retracements.

In comparison to scalping, the single-trade profit potential and risk associated with day trading is much larger. Although day trading ES futures in live time isn’t for everyone, it’s a strategy worth considering.

E-mini S&P 500 Swing Trading Strategies

Although more capital-intensive than scalping and day trading strategies, swing trading is another approach that many traders take with the ES contract. Swing trading involves holding an open position in the market for several days to two weeks in an attempt to secure market share. The risk exposure of such strategies is enhanced, but so is the potential for profitability.

Typically, fundamental analysis garners greater importance in swing trading than in the shorter-term methodologies. Because of the extended investment horizon, news items and macroeconomic market drivers can skew the valuation of the E-mini S&P 500 significantly. To account for these factors, traders use various strategies, including:

  • Trend following: Joining an intermediate or long-term trend is one strategy popular with swing traders. The methods are similar to the intraday buying/selling of pricing retracements, but traders place a greater emphasis on market fundamentals.
  • Economic cycle: Swing traders typically select a particularly active time or turning point in an economic cycle to trade. Positions are often taken ahead of a U.S. Federal Reserve meeting because policy moves have a tendency of affecting ES futures live in the market. If a dovish policy is expected, a trader may open long positions, and rate hikes typically inspire shorts. In either case, entry points are often determined by technicals, such as moving averages or chart patterns.

Getting Started with the E-mini S&P 500

For more information on the E-mini S&P 500, check out the free Daniels e-book Introduction to E-mini Stock Index Futures. Featuring tips and strategies for trading the leading U.S. indices such as the E-mini DOW, NASDAQ, and S&P 500, it’s an indispensable resource for anyone interested in equity index futures.

Webinar! Micro E-Mini Equity Futures: Small Contracts, Big Opportunities

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2023 StoneX Group Inc. All Rights Reserved