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Determine Which Small Exchange Futures Products Are Best for Your Trading Strategy

February 15, 2021 by Daniels Trading| Tips & Strategies

A trading strategy is a rules-based, structured approach to the buying and selling of securities on the open market. The key components of any trading strategy are time horizon, risk versus reward, and product. No matter what your approach to the markets may be, these three factors will largely dictate how, when, why, and what you trade.

For active traders, the lineup of products available on the Small Exchange offers the utmost flexibility. No matter your strategy, capitalization, or expertise, there’s a Small contract ideal for your needs. Don’t be fooled into thinking you have to “go big” to do big business―there are tremendous upsides to trading the Smalls.

Stay Nimble with the Smalls

Perhaps the single greatest advantage to trading on the Small Exchange is strategic flexibility. The Smalls provides countless options for trading the world’s most popular asset classes as you see fit. Here’s why:

  • Time horizon: Reduced contract sizes and margin requirements open the door to intraday, day, or multiday trading strategies.
  • Risk versus reward: Minimal tick values and pricing limits make aligning risk to reward less capital-intensive.
  • Product: There’s a standardized Small contract for every major asset class—stocks, bonds, currencies, metals, and energies.

The Smalls offer traders product diversity, manageable volatility, and reduced margins―three attributes conducive to the application of nearly any trading strategy. How is this possible? The answer is uniform construction:

  • Pricing: All Small contracts move in price increments of 0.01, which equals $1.00. Compared to other securities, it is simple to calculate unrealized gains and losses in real time.
  • Expirations: The expiration of all Small contracts is the third Friday of each month. This feature removes all of the guesswork surrounding contract expiry, rollover, and settlement.

Compared to futures or forex products, the Smalls are inherently tradable. Gone are the mental gymnastics involved in calculating tick sizes and expirations―all you need is an idea, capital, and the right Small contract.

Choosing the Right Small Contract

The Small Exchange lists six products for trade based on the world’s premier markets: equities, currencies, metals, bonds, and energies. At first, six contracts sounds like an extremely limited product line. However, it’s important to remember that each Small contract is a comprehensive representation of its underlying asset class. Strategically, this functionality is ideal because you can diversify holdings while achieving pure exposure.

To illustrate this point, let’s break down the six Small contracts and the components of each:
Find out which equities or metals contract is best suited to meet your trading goals. Download our comparison chart to learn more today.

Small Technology 60 (STIX)

The STIX tracks the 60 most active stocks facing the technology sector. Apple (AAPL), IBM (IBM), and Microsoft (MSFT) are included. The STIX has intraday limits of 9 percent and 13 percent and a daily limit of 20 percent.

Small Stocks 75 (SM75)

The SM75 is a conglomeration of the 75 most active stocks from the tech, industrial, energy, financial, and material sectors. Google (GOOGL), Caterpillar (CAT), Haliburton (HAL), and JP Morgan (JPM) are included. The SM75 has intraday limits of 9 percent and 13 percent and a daily limit of 20 percent.

Small U.S. Dollar (SFX)

The SFX contract is representative of the U.S. dollar versus a weighted basket of the seven major global currencies. Included are the euro (EUR, 33.9 percent), the Chinese renminbi (CNY, 21.3 percent), the Japanese yen (JPY, 16.2 percent), the British pound (GBP, 11.9 percent), the Canadian dollar (CAD, 7.5 percent), the Australian dollar (AUD, 5.4 percent), and the Mexican peso (MXN, 3.8 percent). The SFX has intraday limits of 9 percent and 13 percent and a daily limit of 20 percent.

Small Precious Metals (SPRE)

The SPRE is a weighted precious metals index that tracks the performance of gold (2.4466 percent), silver (96.3383 percent), and platinum (0.5108 percent). The SPRE has intraday limits of 9 percent and 13 percent and a daily limit of 20 percent.

Small 10YR US Treasury Yield (S10Y)

The S10Y is based on the pricing of 10-year U.S. Treasury notes and yields. The S10y has intraday price limits of 175 ticks and 350 ticks and a daily limit of 500 ticks.

Small Global Oil (SMGO)

The SMGO contract incorporates multiple crude oil products to track broader global oil pricing. Intraday limits are not applicable, and the daily price limit stands at 20 percent.

With these six contracts, the Small Exchange provides participants plenty of strategic freedoms. First, the reduced contract size of the Smalls allows for manageable margin requirements and tick values. These attributes make the execution of positive risk versus reward intraday, day, swing, or longer-term strategies possible.

Second, the Smalls address the world’s leading capital markets―no matter where the volatility is, there’s a contract designed to capitalize on the action. Given the capital efficiency and diversity of the Smalls, the possibilities are truly boundless.

The Small Exchange Has Something for Every Trader

Regardless of your strategy, the Small Exchange has a contract suitable for your needs. To get up and running in these exciting markets, check out our Micro, Mini, and Smalls Comparison Chart today.Equities and Metals Comparison Chart

Filed Under: Tips & Strategies

About Daniels Trading

Daniels Trading is an independent futures brokerage firm located in the heart of Chicago’s financial district. Established by renowned commodity trader Andy Daniels in 1995, Daniels Trading is built on a culture of trust committed to the firm’s mission of Independence, Objectivity and Reliability.

Risk Disclosure

THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.

YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.

GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.

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Risk Disclosure

THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.

YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.

GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.

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