Micro E-mini Nasdaq 100 Trading Strategy – Rules, Backtest, Futures Example
The micro E-mini Nasdaq 100 futures strategy is the method or technique that you can use to trade the micro E-mini Nasdaq 100 futures profitably. Micro E-mini Nasdaq 100 futures are a type of electronically traded Nasdaq 100 futures that are one-tenth the price of the E-mini Nasdaq 100 futures. Like the e-mini and conventional contracts, the underlying asset is the Nasdaq 100 Index. They are traded electronically on the CME Globex platform and settled in cash at expiry. Technical and fundamental studies for market timing and risk management strategies can be included in the micro E-mini Nasdaq 100 futures strategy.
The micro e-mini Nasdaq 100 futures is an inexpensive way to trade the Nasdaq 100 index — an index of the largest 100 non-financial companies listed on the Nasdaq stock exchange. At one-tenth the size of the popular E-mini Nasdaq 100 futures, micro e-mini Nasdaq 100 futures make it possible for small-cap retail traders to gain exposure to the Nasdaq 100 index. Do you have a micro E-mini Nasdaq 100 futures strategy?
In this post, we answer some questions about the Micro E-mini Nasdaq 100 futures strategy. We also make a backtest to show you how you can make money in this competitive asset.
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What are Micro E-mini Nasdaq 100 futures?
The Micro E-mini Nasdaq 100 futures are electronically traded Nasdaq 100 futures whose value is one-tenth of the E-mini Nasdaq 100 futures. Like the e-mini and the standard contracts, the underlying asset is the Nasdaq 100 Index, which is an index of the largest 100 non-financial companies listed on the Nasdaq stock exchange.
The Micro E-mini Nasdaq futures contract is traded electronically on the Chicago Mercantile Exchange (CME) and expires quarterly in March, June, September, and December. It enables traders to profit from short-term price fluctuations in the index. The contract is financially settled on expiry.
What is a Micro E-mini Nasdaq 100 futures strategy?
A micro E-mini Nasdaq 100 futures strategy is a methodology for trading Nasdaq 100 e-mini futures micro contracts. Speculators can profit from price movement by timing their entry into the market with technical indicators and fundamental analysis. Your strategy should also include adequate risk management and a position-sizing plan to maximize the likelihood of winning.
To trade futures profitably, you must have a tested trading technique. Your approach must incorporate precise entry and exit locations, sound risk management, and a strong understanding of market psychology. You can use this strategy for hedging and speculation, as well as spread betting and arbitrage.
Micro E-mini Nasdaq 100 futures strategy backtest
The micro contract has a relatively short history compared to the original Mini contract. Because of this, we backtest the Mini contract. The difference should be minimal for this particular trading strategy.
Trading Rules
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Because it’s a strategy behind a paywall, we don’t want to reveal its setup and trading rules. We can reveal that it has three buy variables and one simple sell variable. It has many years of out of sample data. We first published this strategy around 2017 and published it as a monthly trading edge in August 2021.
Let’s look at the equity curve when we backtest the Nasdaq e-micro mini contract (backtest done in Multicharts):
We implemented no risk management parameters (like stops, for example). We leave that to the trader.
Let’s look at the performance metrics of the E-micro mini Nasdaq trading strategy:
The backtest is done using Norgate’s data from the Chicago Mercantile Exchange (CME) on continuous and back-adjusted data. The backtest trades at the close, is based on daily bars, and is from the contract’s inception until today.
What is the seasonality of Micro E-mini Nasdaq 100 futures?
Seasonality is a market word that describes the regular movement of the price of specific securities over certain times. Periods can also refer to months or seasons (such as autumn/fall, winter, spring, and summer).
The chart below shows that Nasdaq 100 futures perform better in spring and fall than in winter and summer.
What moves the Micro E-mini Nasdaq 100 market — What affects the Micro E-mini Nasdaq 100 market the most?
The E-mini Nasdaq futures are affected by several economic factors, including the following:
- Price changes for individual components: Because the Nasdaq composite index is a market capitalization-weighted index, the index’s movement is more sensitive to price changes in higher-cap stocks than in lower-cap firms. Earnings announcements from large-cap stocks can have a big impact on the index.
- Fed interest rate decision: The Fed’s stance on interest rates can affect individual index components and alter the E-mini Nasdaq futures.
- Economic updates: The price movement of the Nasdaq composite index can be influenced by macroeconomic news items such as inflation, jobs, manufacturing index, etc.
- US Dollar Index: The US Dollar Index measures the strength of the US dollar relative to other currencies. When the dollar strengthens, the index rises, and when the dollar falls, the market falls.
How are Micro E-mini Nasdaq 100 futures traded?
Micro E-mini Nasdaq futures contracts are available for trading on the CME Globex electronic platform. They can be traded from 6:00 pm ET on Sundays to 5:00 pm ET on Fridays, with an hour break at the end of each trading day. On the CME ClearPort, trades are open from
Sunday 6:00 pm – Friday 6:45 pm ET (Sun 5:00 – Fri 5:45 pm CT) with no reporting Monday – Thursday 6:45 pm – 7:00 pm ET (5:45 pm – 6:00 pm CT).
The contracts are listed quarterly (March, June, September, and December) for five consecutive quarters. One contract unit is equivalent to the Nasdaq 100 index’s current value multiplied by $2. The price is given in US dollars and cents per index point. The contract is cash-settled, and trading ends on the third Friday of the contract month at 9:30 am. ET.
How do you start trading Micro E-mini Nasdaq 100 futures?
To trade the E-mini Nasdaq futures, you must first open an account with a futures broker who will get you access to the CME market where the futures contracts are traded. So, open an account with a futures broker and fund it with a little more than the required margin. Because futures contracts are leveraged instruments, they can be traded on margin. The required margin is often a fraction of the underlying asset’s face value.
Some brokers, such as IG, offer micro E-mini Nasdaq 100 futures CFDs for speculation. A contract for difference (CFD) is an agreement between you and your broker to swap the price difference between your transactions’ opening and closing prices. CFDs trade continuously, so you don’t have to worry about contract expiry and rolling over to the next contract month.
What is the Micro E-mini Nasdaq 100 trading at?
As of December 18, 2022, the Micro E-mini Nasdaq 100 futures were trading at $11,344.75. See the chart here on the CME platform chart. The chart was gotten from TradingView.
Note that the price changes from time to time, so what is quoted here may not be the price it is trading now you are reading this post. You can click on any of the links to get the real-time price on the CME platform or directly from TradingView.
What’s Micro E-mini Nasdaq 100 futures hour?
The Micro E-mini Nasdaq 100 futures trade on the CME Globex electronic platform from Sundays to Fridays, from 6:00 pm – 5:00 pm ET (5:00 pm – 4:00 pm CT), with a daily maintenance period from 5:00 pm – 6:00 pm ET (4:00 pm – 5:00 pm CT).
For CME ClearPort, the trading schedule is Sunday 6:00 pm – Friday 6:45 pm ET (Sun 5:00 – Fri 5:45 pm CT) with no reporting Monday – Thursday 6:45 pm – 7:00 pm ET (5:45 pm – 6:00 pm CT).
Where can I find trading charts?
You can find the chart on any trading platform that provides chart services. If your platform does provide charts, you can use TradingView, but to connect TradingView to your broker, you must subscribe to its Pro services. From the CME platform, you can also access the TradingView chart.
You can also use MultiCharts, but it is a paid trading chart platform.
What are the trading symbols for Micro E-mini Nasdaq 100 futures?
The trading symbol for the Micro E-mini Nasdaq 100 futures contract is MNQ. The product codes for the various sections are as follows:
- CME Globex: MNQ
- CME ClearPort: MNQ
- Clearing: MNQ
What is the specification for the Micro E-mini Nasdaq 100 futures contract?
One unit of Micro E-mini Nasdaq futures (MNQ) is equivalent to the index’s current price multiplied by $2 (current value of the index X $2). The price is indicated in US dollars and cents per index point, with a minimum price variation of 0.25 index points, which translates to $0.50 per contract.
The contracts are listed quarterly (March, June, September, and December) for five consecutive quarters. Contracts are financially settled on expiry, and trading ends at 9:30 am ET on the third Friday of the contract month.
Why should you start trading Micro E-mini Nasdaq 100 futures?
The Micro E-mini Nasdaq futures are traded for a variety of reasons, including:
- Speculation: Trading the E-mini Nasdaq futures contracts allows a trader to speculate on the Nasdaq index’s direction and profit from price changes. Furthermore, futures contracts are highly leveraged, allowing you to trade on lower margins than the main index.
- Diversification: E-mini Nasdaq futures can be used to diversify your investment portfolio by spreading risk across numerous equities rather than just one.
- Hedging risk: It can be utilized to balance your position in the stock market, a typical strategy most institutional investment organizations employ.
What is the contract size?
One contract of the Micro E-mini Nasdaq futures is equivalent to the current value of the index multiplied by $2. So, the worth of a contract in dollars depends on the index’s current price. For instance, given that the current price is 11344.75 as of the time of writing, the dollar worth of one contract of the Micro E-mini Nasdaq (MNQ) would be $22,689.5, i.e. ($2 X 11,344.75).
What is the tick size?
The tick size of one contract of the Micro E-mini Nasdaq futures is $0.50 for outright trading on Globex and $0.10 for Calendar Spread.
What is the minimum price fluctuation for Micro E-mini Nasdaq 100 futures?
The minimum price fluctuation for Micro E-mini Nasdaq futures is 0.25 index points for outright trading on Globex and 0.05 index points for Calendar Spread.
Are there any ETFs?
Yes, many ETFs track the Micro E-Mini Nasdaq 100 futures market. These are some of them:
- Invesco Nasdaq 100 ETF (QQQM)
- Invesco QQQ (QQQ)
- Vanguard Information Tech ETF (VGT)
What factors affect Micro E-mini Nasdaq 100 prices?
Many factors affect the price of the Micro Nasdaq E-mini futures; some of them are:
- The movement of the highly weighted component stocks of the index, such as Apple, Tesla, Amazon, and Microsoft.
- Macroeconomic reports, such as GDP growth rate, interest rates, CPI, and so on
- Interest rate policy
- The state of the economy
- Sociopolitical events
What is the all-time high for Micro E-mini Nasdaq 100 futures?
Based on the TradingView chart for Micro E-mini Nasdaq futures, the all-time high of this contract is 16,676.50, which it reached on Nov 2021.
What are the biggest risks in trading Micro E-mini Nasdaq 100 futures?
The inherent risk of trading any futures, including the Micro E-mini Nasdaq futures, comes from large price movements. Since futures are leveraged products, the losses are calculated using the index value rather than the deposited margin. It means that if you trade with a 10% leverage, a 1% drop in price will lead to a 10% loss and a 7% loss in a 70% loss in your trading capital, and any percentage drop larger than that will blow your account.
What is the settlement method?
Financially settled.
What is the settlement procedure?
The settlement is by cash to the special opening quotes of the index on the day of final settlement, which is normally the third Friday of the contract month.
What is the block minimum for Micro E-mini Nasdaq 100 futures?
There is no block trade eligibility for this contract.
What is the difference between Micro E-mini Nasdaq 100 futures and the CFD for Micro E-mini Nasdaq 100?
The Micro Micro E-mini Nasdaq 100 futures contracts have fixed expiration dates, while its CFDs can be traded indefinitely without any concern for contract expiry.
Which forex pair is the same as Micro E-mini Nasdaq 100 futures
Micro E-mini Nasdaq 100 CFD
What are some important dates for this market?
These are a few of the important dates for the E-mini Nasdaq 100 index futures market:
- January 1985, when the Nasdaq 100 Index was created
- June 21, 1999, when the Nasdaq 100 futures were introduced
- 1999 when the E-mini contract debuted on the CME platform
- 2019 when the micro E-mini contract was created
- November 2021, when the index futures market made its all-time high of 16,676.50
What is the highest Micro E-mini Nasdaq 100 has ever been — its all-time high?
Based on the TradingView chart for E-mini Nasdaq 100 futures, the highest level the contract ever traded was 16,676.50, which it reached in Nov 2021.
What is the lowest Micro E-mini Nasdaq 100 has ever been — its all-time low?
Based on the TradingView chart for Micro E-mini Nasdaq 100 futures, the lowest level the Micro E-mini Nasdaq 100 index futures has ever reached is 6,628.75, which happened in March 2020.
Conclusion
Trading equity index futures can help diversify your investment portfolio, hedge risk, or earn big profits from speculation. You must utilize a decent Micro Nasdaq 100 E-mini futures strategy to trade the Micro E-mini Nasdaq 100 futures.
FAQ:
How do I start trading Micro E-mini Nasdaq 100 futures?
To trade, open an account with a futures broker, fund it with more than the required margin, and start trading. Some brokers may offer Micro E-mini Nasdaq 100 futures CFDs for speculation.
What is the settlement method for Micro E-mini Nasdaq 100 futures?
Micro E-mini Nasdaq 100 futures are financially settled, with cash settlement based on the special opening quotes of the index on the day of final settlement, typically the third Friday of the contract month.
What factors affect Micro E-mini Nasdaq 100 prices?
Factors influencing prices include movements of highly weighted component stocks, macroeconomic reports, interest rate policies, economic conditions, and sociopolitical events.