Jeffrey Brewer Interview - Founder of the Power Emini Trading Room

Read this transcript of my recent interview with Jeffrey Brewer, our head trader, to learn more about this unique day trading environment. 

Phil: We are here in the studio today with Jeffrey Brewer, our head trader and host of our weekly Emini Show - I have to say... it really looks like a fun place and you already have quite a following of traders, you must be doing something that people like!

Jeffrey: Thanks Phil, yeah I have to tell you, its been great, we are really getting a good turn out from people all over the country that love the concept of day trading the emini and there is nothing better than being able to interact and share trading ideas and learn from each other during the day.

Phil: For those people who don't even know what the Emini Futures are... can you give us a quick overview?

Jeffrey: Well there are many different "Emini" futures contracts that can be traded now, but the most popular is by far the original S&P or ES, that was introduced back in 1997 by the Chicago Mercantile Exchange or CME. Being 15 years old, has become one of the most important trading vehicles worldwide. For example, the average daily volume for the S&P ES contract is over $140 billion, which exceeds the combined traded dollar volume of the 500 underlying stocks themselves. Basically the Emini is very straight forward. The contract price moves in 0.25 increments called "ticks". Each tick of movement is $12.50. There are 4 ticks in a point which equates to $50. So a 2 point move in your favor makes you $100 for example. The futures symbol that is use is "ES".

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Phil: What is the main advantage of trading mini index futures for those who may only be familiar with day trading individual stocks?

Jeffrey: There are several advantages that come to mind right away with the mini contract. The first and best is probably the incredible built in leverage you get with the emini. For example, just trading one contract is the equivalent of being able to trade over $50,000 of the SPY for example. And a new trader can setup a futures brokerage account for only a few thousands dollars and begin trading several contracts. So the leverage is fantastic for somebody that is not heavily capitalized in the market. Of course, when trading with this kind of leverage, proper money management is very important and you typically do not hold any  contract positions overnight. Other advantages are the great liquidity, the fact that you can trade long or short with equal ease.

Phil: Do you think it easier to day trade stocks or the emini for beginners?

Jeffrey: Definitely the Emini and here is why. First of all, lets go back to the fact that every tick is always $12.50 of price movement and every point is always $50.00. This is fixed amount per contract traded, so it is very easy to learn. Without to much trouble you get into a rhythm shooting for 3 tick targets or 1.5 point targets for example, no math involved. With individual stocks on the other hand, you will constantly be trading different priced stocks and different share amounts so there is a lot more math involved every time you take a trade to determine your correct position sizes stops and targets. When trading stocks you have percentages targets which have to be calculated, but with the mini contract its just the ticks and points which is straight forward. So the whole Emini thing is a whole lot easier for a beginner to get their head around. The other thing that makes it easier to trade is that we trade the same vehicle everyday. With individual stocks you many times get stuck in the trap of constantly having to scan through large numbers of equities the night before to find just the right trading setups for the next day, and then many times morning gaps the next day mess up your trade entries. This is not only frustrating but results in a lot of wasted time. Trading in this futures market we do not have morning gap problems because it is a fluid market trading 23 hours a day.

I will be posting more of my interview with Jeffrey Brewer next week...stay tuned!


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