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Taking Earl's example of commissions you will see my main problem with
the E-Mini. It's
not a mini, it's a micro. On a full size S&P the commission of $43
(which I think is outrageous)
divided by a full point is 43/250 = 0.172. Which I interpret as 17.2%
per contract in the hole
from the get go on any full size S&P trade. Now, look at the E-mini,
43/50 = 0.86. Which I
interpret to as 86% in the hole from the initation of the trade. So, the
E-mini dramatically
increases the risk due to the disproportionate commission per point
value. In order to offset
this I believe you would have to trade longer term for E-mini's vs full
S&P. And since the
S&P seems to be more suited to short term trading than to long term
trading, you now find
yourself in the position of taking on more risk because of the
commission structure when short
term trading or more risk when you trade longer term because it is
contrary to the nature of
the S&P market. So, when you compare them the E-mini is not the less
risky, it just merely
gives that illusion because you risk less money in a given trade.
If you still can't understand it, then just compare trading 5 E-mini's
at $215 commission with
trading 1 S&P at $43 commission. The commission structure makes a huge
difference in overall risk.
And we haven't even discussed the effects of the different tick values,
which adds even more risk.
Earl Adamy wrote:
>
> Discussions regarding service would be a bit more informative if the approximate
> rate and type of service (full, discount, electronic only) is indicated. My
> broker will accept stop, limit, and market orders on the EMini if I use the full
> service desk at $43 r/t but won't accept them on the discount desk I use at $20
> r/t. They also advertise a $15 rate for the EMini but it's introductory only,
> then goes to standard rate of $25. This is not to say that full service isn't
> worth the money for those who getting the hang of futures trading or requiring
> special services or assistance. I strongly suspect that the large brokers are
> milking the spread between the EMini and S&P and could easily lower their
> commissions. Personally, I am of the opinion that one will get the best price
> and execution where there is the greatest liquidity and today that's in the full
> S&P. That doesn't mean that traders, particularly small traders, won't get hosed
> on price or service.
>
> Earl
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