Risks of E-mini Nasdaq Index Futures Trading
Similar tootherequity index futures contracts, the primary riskoftradingE-mini Nasdaq100index futures orMicro E-miniNasdaq 100 futuresis that the pricewill go against the trader’s position. Usingappropriate tradesizing for your account size and having a robust risk management plan that includes stop losses or a trailing stop can helplimit your financial exposure.
Many factors can influence the price of E-mini Nasdaq futures in the short-term and long-term including changes in interest rates, economic reports, and changes in the US central bank (Fed) policy. Following key news and announcements is critical as these events can move the major stock market indexes significantly.
As many stock indexes are highly correlated to the E-mini Nasdaq 100, it is a good idea to track the other highly active futures markets including the E-mini S&P 500 index futures, the E-mini Dow index futures, and the E-mini Russell 2000 index futures.
Tips to keep in mind especially for newer futures traders include:
- Practice in a futures trading simulatorthat reflects live market conditions until you prove to yourself that you are comfortable with the market swings. Then, when you start trading with real dollars, trade small to start, and work your way up.
- Build a well-defined futures trading planincluding clear entry and exit criteria, analysis of market conditions, and a schedule for when you are and are not going to trade.
