Trading stocks is attractive for several reasons, not the least of which is the fact that money you put into stocks can provide you with more return on your investment than letting your money sit around in paper bags in your home or even in a bank. On the other hand, you can also lose a lot of money trading stocks, which can make getting started in stocks intimidating. If you are just getting started, trading e-minis is a good fit.
Leverage
The word leverage is used in financing to mean maximizing your gains. For example, if you invest $50 in a mini future stock and that stock increases by 5 points over a day of trading, you have just netted a $250 increase. This is a good example of leveraging your money. E-mini stocks typically have a low cost to buy-in and yield a lot of gain for your money. At the same time, if you invest money and suffer a loss, you minimize the damage because e-minis do not require you to invest a lot of money upfront. Thus, as you are learning how to trade stocks, you can maximize your gains and minimize your losses.
Correlation
Correlation is used in stock-trading circles to indicate how stocks move in conjunction one with another. Because of how interconnected the world's markets are, problems in the market in Europe or Asia can create problems for markets in the U.S. You can do all the research you want for the stocks in the American economy, but if you are trading a highly correlated stock, problems in markets that were not included in the scope of your research can thwart your best-laid money-making plans. E-minis can help you isolate your investment from changes in the global market by choosing your favorite index and then trading on local markets.
Electronic Trading
One final advantage of trading e-mini stocks is that you do not have to put your money in the hands of a broker on Wall Street. Instead, you can trade from your personal computer and take complete control of your investments. The fact that you can read changes in the market and adjust your investments accordingly can help you to avoid taking losses and maximize your gains.
Trading in e-minis requires you to be more involved in your investments than you would be if you hired a firm to do the trading for you, but you do not have to invest large sums of money as you would have to with other types of stocks. Thus, if you are looking for an entry into the world of trading stocks, e-minis are a good place to start.
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