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. If you want to trade these futures, you'll be able to trade them almost 24 hours per day, from 6 p.m. EST on Sunday to 5 p.m. Friday. There is a trading halt between 4:15 p.m. and 4:30 p.m. each day.
The most active ES contract typically has a daily trading volume between 1 million and 2 million contracts. This fluctuates with volatility. As you might expect, volatile days have higher volume, and low-volatility days are more on the lower end of the volume range. Between 2008 and 2017, ES futures typically had a daily range of 10 points when volatility is low and 40 points or above when volatility is high.
ES Contract Specifications
Contract specifications are the basics a trader should know about the futures market they are trading. The contract specifications for the ES futures market are as follows:
Knowing the tick and point value is important for controlling risk and trading the proper futures position size. For example, if you're a day trader and you're willing to risk $100 per trade, you could buy two contracts with a stop-loss order one point away from your entry. If the price hits the stop-loss, the loss is kept to $100. Alternatively, if you only buy one contract and set a two-point stop-loss, this 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. Each expiry month has a code:
- March is H
- June is M
- September is U
- December is Z
If trading the March contract, the symbol is ESH, for example, but you also need to know the year. Take the last digit of the year and add it to the symbol. In 2015, the March contract symbol is ESH5. In 2017, the March contract is ESH7. The December 2019 contract is ESZ9.
Some websites and platforms use the last two digits of the year—for example, ESU16 for the September 2016 contract. Those are the basics for futures markets expiration dates, but you can dive deeper into the details if you'd like to know more.
S&P 500 (ES) Holidays
In general, the ES futures market is open for trading every trading day, Sunday night through Friday night. However, there's an exception for the holidays, which can be found on the 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. In all other months, there is at least one trading day that 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 their popularity provides ample volume and volatility most days to generate a profit.
The hours surrounding the stock market open at 7:30 a.m. has the best price movement and volume, making it ideal for day trading. The last hour of trading, from 3 p.m. to 4 p.m., also typically sees more price movement and volume compared to quieter hours in the middle of the day.
Practice an ES day trading strategy before trading with real money. There are several programs, including NinjaTrader, that allow traders to download historical market data, and test out trading strategies 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. Even if you can trade during open hours, it may be best to stick to practice, unless you can trade during those few hours when day trading is best.
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 that traders start day trading with at least $3,500, and preferably $6,500 to $7,000. To swing trade ES futures, start with at 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. A margin requirement 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. In other words, to open a one-contract position the trader only needs $500 in their account. However, it's highly recommended that traders start with at least $3,500 or more in their accounts.