Profile of the S&P 500 (ES) Futures Market
Learn the Basics of Trading S&P 500 or ES Futures
Futures that trade under the symbol ES are based on the S&P 500 stock index, a benchmark for U.S. stocks. The S&P 500 index is calculated using the stock prices of 500 large U.S. companies.
ES futures trade on an electronic trading system. The contracts trade almost 24 hours per day, from 6:00 p.m. Eastern Time (ET) on Sunday night to 5:00 p.m. Friday night. There is a trading halt between 4:15 and 4:30 PM ET each day.
The most active ES contract typically has daily trading volume between one and two million contracts. This fluctuates with volatility. Volatile days have higher volume and low volatility days are more toward the lower end of the volume range.
Between 2008 and 2017, ES futures typically have had a daily range of 10 points when volatility is low and 40 points or above when volatility is high.
ES Contract Specifications
Contracts specifications are basic things a trader should know about the futures market they are trading. The contract specifications for the ES futures market are as follows:
- Symbol: ES
- Expiration months: March, June September and December
- Exchange: Chicago Mercantile Exchange (CME) Globex
- Currency: U.S. Dollar
- Tick size / Minimum Price Fluctuation: 0.25 points
- Tick Value or Profit/Loss Per Tick: $12.50
- Ticks Per Point: 4, making each point worth $50 per contract
Knowing the tick and point value is important for controlling risk and trading the proper futures position size.
For example, if a day trader is willing to risk $100 per trade, they could buy two contracts with a stop loss one point away from their entry. If the price hits the stop loss, the loss is kept to $100. Alternatively, buying one contract with a two point stop loss results in the same $100 loss.
The base symbol of the E-mini S&P 500 future is ES, but since there are multiple expiry dates for each year the full symbol is longer.
- March is H
- June is M
- September is U
- December is Z
If trading the March contract, the symbol is ESH, for example, but we also need to know the year. Take the last digit of the year and add it to the symbol. In 2015 the symbol is ESH5. In 2017, the March contract is ESH7. The December 2019 contract is ESZ9.
Some websites and platforms use the last 2 digits of the year, for example, ESU16 for the September 2016 contract. See Futures Market Expiration Dates for more information.
S&P 500 (ES) Holidays
The ES futures market is open for trading every trading day, Sunday night to Friday, except for the holidays, which can be found here: CME Holiday Calendar. There are trading hour alterations or closures around national holidays. There is a national holiday every month except for April, June, September and October. Therefore, in all other months there is at least one trading day which may be affected by a holiday.
Trading E-Mini S&P 500 (ES) Futures
The E-mini S&P 500 (ES) futures are some of the most liquid in the world and are popular among day traders. ES futures can be traded every day, as there is ample volume and volatility most days to generate a profit.
The couple hours surrounding the stock market open at 7:30 a.m. ET have the best price movement and volume, and are ideal for day trading.
The last hour of trading, from 3:00 to 4:00 p.m. ET, also typically sees more price movement and volume compared to middle, quieter, portion of the day.
Practice an ES day trading strategy before trading with real capital. There are a number of programs, including NinjaTrader, that allow traders to download previous trading days and trade them whenever they like. This is beneficial for people with limited time or who want to practice in the evening when the market isn't open or isn't active. Recall, the best times to day trade are limited to a few hours each day.
Risk management is paramount for successful ES trading. How much you start trading with will depend on your strategy and how much you are willing to risk per trade. It's recommended traders start day trading with at least $3,500, and preferably $6,500 to $7,000.
To swing trade ES futures, start withat least $10,000, but ideally more.
E-Mini S&P 500 Margins
Day traders have lower margin requirements than traders who hold futures positions overnight. Margin is how much the trader must have in their account to open a futures position. For every ES contract held overnight, the trader must have $4,950 in their account at the time the position is opened. Day traders don't hold positions overnight, and are therefore not subject to this rule. Instead, the broker sets the margin requirement. Day trading margins start as low as $500 with some brokers. That means to open a one contract position the trader only needs $500 in their account. As indicated above, though, starting with at least $3,500 or more in the account is highly recommended.
Updated by Cory Mitchell.