For active traders, finding an ideal market to trade is a critical task. Although the best products exhibit liquidity and volatility―two vital attributes―there are many other factors to consider. Regardless of your experience level, it is easy to get overwhelmed.
If you’re feeling hopelessly lost choosing a forex pair, futures contract, or stock to trade, we have good news. The listings available at the Small Exchange have made the game exponentially easier. Let’s take a look at three key benefits of the Smalls and why the Small Exchange is a premier financial destination.
1. Uniform Construction
As any veteran of the capital markets will tell you, trading securities can be difficult. Not only are the markets fickle, but it also takes time and effort to become fluent in how to physically trade them. Forex, futures, debt, and equity products are all unique, but the Smalls eliminate much of the guesswork via uniform construction.
At the Small Exchange, all products are designed with simplicity in mind. The products don’t have unique expiration dates and pricing modules. Each Small contract is the same with respect to the following guidelines:
- Uniform expiration: Contract expiry for all Smalls is scheduled for the third Friday of the month.
- Uniform pricing: All Small contracts move in 0.01 increments that are valued at $1.00.
2. Fully Customizable Granularity
In the arena of active trading, granularity refers to the incremental adjustment of applied leverage up or down. This is one area where the Smalls excel. Their reduced contract size allows for the full customization of any trade’s market exposure.
To illustrate the ins and outs of the Small Exchange’s granularity, assume that you are trading bullish U.S. large-cap stocks. Here are a few products you can buy to secure long-side exposure:
| Product | Tick Value | Intraday/Overnight Margin |
|---|---|---|
| E-mini S&P 500 Futures | $12.50 | $750.00/$11,000.00 |
| Micro E-mini S&P 500 Futures | $1.25 | $100.00/$1,100.00 |
| Vanguard S&P 500 ETF | $0.01 | Market price (2/21, $358.00 per share) |
| Small Stocks 75 | $1.00 | $475.00/$523.00 |
*Margins and market prices subject to change
As you can see, there are big differences in the amounts of money needed to buy each of these products. However, the reduced margins of the Small Stocks 75 enable traders to routinely increase position size or hold positions through the closing bell. To accomplish this with Micro E-mini or E-mini S&P 500 futures, the cost is much higher. And, although the Vanguard S&P 500 ETF offers ownership, the capital needed to generate comparable dollar-for-dollar returns measures in the thousands, not hundreds.
3. Diversification
The lineup of contracts listed on the Small Exchange is best described as diverse. Even though there are only six unique products, all of the world’s major asset classes are represented. Here is a brief synopsis of the Smalls:
| Contract | Description |
|---|---|
| Small Technology 60 (STIX) | Most active stocks from the tech sector |
| Small Stocks 75 (SM75) | Most active stocks from the five major sectors |
| Small U.S. Dollar (SFX) | USD vs. seven leading global currencies |
| Small Precious Metals (SPRE) | A weighted basket of gold, silver, and platinum |
| Small 10YR U.S. Treasury Yield (S10Y) | Based on U.S. 10-year note yields |
| Small Global Oil (SMGO) | An index representative of global crude oil |
Note: Contract weights and compositions are subject to change
When it comes to diversifying your portfolio, look no further than the Smalls. Each contract provides traders direct and comprehensive exposure to the underlying asset class. No longer do you have to open a forex, futures, and equity account to diversify risk―on the Small Exchange, you’re free to mix and match positions as you deem fit.
Are You Ready to Trade the Small Exchange?
Simple is almost always better. With the Small Exchange, participants enjoy a user-friendly, exceedingly tradable lineup of products. Click here to learn more about what the Smalls and Daniels Trading can do for you.
