E-mini S&P MidCap 400 Trading Strategy (Backtest And Futures Example)
Last Updated on May 27, 2023
Launched in 1991, the $&P 400 index is a benchmark index of 400 mid-sized companies in the US market published by Standard & Poor’s (S&P). The futures contract, E-mini S&P MidCap 400 Futures, is one of the leading index futures traders use to hedge their exposure in the US stock market or speculate in the direction of the market. Want to know about the E-mini S&P MidCap 400 futures strategy?
The E-mini S&P MidCap 400 futures strategy refers to the methodology or technique you can use to profitably trade S&P MidCap 400 futures, and it often includes technical and fundamental analyses for market timing and risk management. The E-mini S&P MidCap 400 futures are futures contracts whose underlying asset is the S&P MidCap 400 Index to the tune of $100 x the index’s current value. Trading on the CME Globex platform, the contract allows you to take positions on the direction of the S&P MidCap 400 index, either for speculation or hedging purposes.
In this post, we answer some questions about the E-mini S&P MidCap 400 futures strategy. At the end of the article, we make a strategy and backtest it.
What is the E-mini S&P MidCap 400 futures?
The E-mini S&P MidCap 400 futures are financial derivative products that represent a contract to buy or sell a specified amount of the S&P MidCap 400 index on a future date, at a pre-agreed price. The index consists of 400 companies with midrange market capitalization — between $3.6 billion and $13.1 billion.
With the E-mini S&P MidCap 400 futures, the underlying asset is the S&P MidCap 400 Index to the tune of $100 x the index’s current value. The contract trades on the CME Globex platform and allows you to take positions on the direction of the S&P MidCap 400 index, either to hedge your exposure in the US equity market or to speculate and profit from price fluctuations of the index.
What is an E-mini S&P MidCap 400 futures strategy?
An E-mini S&P MidCap 400 futures strategy is a method or technique for trading the S&P MidCap 400 futures market. It involves technical and fundamental analyses for market timing, position sizing, and risk management.
To trade index futures profitably, you must have a solid trading strategy. Your strategy for E-mini S&P MidCap 400 futures should have precise entry and exit signals, as well as risk management techniques. You may have a strategy for speculating or hedging risks with the index futures, but you can also do arbitrage or spread trading.
E-mini S&P MidCap 400 futures strategy
A backtest with strict trading rules, settings, statistics, and historical performance is coming soon.
What is the seasonality of E-mini S&P MidCap 400 futures?
Seasonality in the financial markets refers to an asset’s price moving in a fairly predictable manner during certain times of the year, which can be months or seasons such as winter and summer.
According to the chart below, the S&P 400 Midcap index tends to perform better in the winter and spring months than in the summer and fall seasons.
What moves the E-mini S&P MidCap 400 — What affects the E-mini S&P MidCap 400 the most?
Many factors can affect the E-mini S&P Midcap 400 futures, and these are some of them:
- The movement of the component stocks: The S&P Midcap 400 index is a market-capitalization-weighted index, so the fluctuation of the index depends more on the movement of higher-cap stocks than on the lower-cap stocks.
- Interest rate changes: Changes in interest rates can affect stock prices and move the S&P Midcap 400 futures.
- Economic news: Macroeconomic news reports, such as GDP growth rates, manufacturing index, and so on, affect the movement of the S&P Midcap 400 futures.
- Value of the U.S. dollars: Most times, the value of the S&P Midcap 400 index rises when the USD is depreciating and falls when the USD is appreciating.
How are E-mini S&P MidCap 400 futures traded?
The E-mini S&P Midcap 400 futures contracts are traded on the CME Group’s exchange and can be traded from anywhere in the world via the Globex electronic platform. The contract trades from Sundays to Fridays from 6:00 p.m. to 5:00 p.m. ET the next day, with a one-hour break at the end of each day.
The contracts come in quarterly cycles of Mar, Jun, Sep, and Dec, with contracts listed for five consecutive quarters. One contract unit is equivalent to the current value of the index multiplied by $100. The price quotation is in USD and cents per index point. The contract is financially settled, and trading terminates at 9:30 a.m. ET on the 3rd Friday of the contract month.
How do you start trading E-mini S&P MidCap 400 futures?
You need to register with a futures broker to be able to trade the E-mini S&P Midcap 400 contract. The broker must have access to the CME exchange where the contract is traded and would help to clear your trades on the exchange. After registering with a futures broker, you have to fund your account. Futures are leveraged instruments, so you don’t need to have the total worth of the contract to start trading it — a little above the required initial margin is all you need.
Another option is to trade the CFD that tracks the E-mini Russell 2000 Index futures, which is offered by some CFD brokers like IG. If you only want to speculate and think you can trust a CFD broker, CFDs that track the E-mini S&P Midcap 400 futures can be a good option. One good thing about CFDs is that they enable you to trade price fluctuations without having to worry about contract expiry.
What is the E-mini S&P MidCap 400 trading at?
As of December 1, 2022, the E-mini S&P Midcap 400 futures were trading at $2585.8. See the chart here on the CME platform chart. The chart was gotten from TradingView.
Since the price changes from time to time, 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 E-mini S&P MidCap 400 futures hour?
The E-mini S&P Midcap 400 futures trade on the CME Globex electronic platform from Sundays to Fridays, from 6:00 p.m. to 5:00 p.m. ET the next day. There is a one-hour break before the start of the next trading day (5:00 p.m. – 6:00 p.m. ET) from Monday to Thursday for maintenance.
The trading hours for BTIC is Sunday to Friday, from 6:00 p.m. to 4:00 p.m. ET, while the CME ClearPort schedule is Sunday – Friday, 6:00 pm – 5:15 pm ET the next day, with a 45–minute break each day beginning at 5:15 pm, Monday to Thursday.
Where can I find trading charts?
The chart is available on any trading platform that provides chart services. If your platform does provide charts, you can use TradingView, which provides free access to the charts of various instruments. However, to connect TradingView to your broker, you must subscribe to its Pro services. From the CME platform, you can also access the TradingView chart. Another place where you can find E-mini S&P Midcap 400 futures charts is Yahoo Finance. You can also subscribe to trading charts through a paid third-party platform like MultiCharts.
What are the trading symbols for E-mini S&P MidCap 400 futures?
The trading symbol for the full contract is EMD. The product codes for the different services are as follows:
- CME Globex: EMD
- CME ClearPort: ME
- Clearing: ME
- BTIC: EMT
What is the specification for E-mini S&P MidCap 400 futures contract?
One contract unit of the E-mini S&P Midcap 400 futures (EMD) is equivalent to the index’s value multiplied by $100. The price quotation is in U.S. dollars and cents per index point, and the minimum price fluctuation is 0.1 index point or $10 per contract.
There are quarterly contracts (Mar, Jun, Sep, and Dec) listed for 5 consecutive quarters. Contracts are financially settled, and trading terminates at 9:30 a.m. ET on the 3rd Friday of the contract month. BTIC trading terminates at 4:00 p.m. ET on the Thursday before the 3rd Friday of the contract month.
Why should you start trading E-mini S&P MidCap 400 futures?
You may want to trade E-mini S&P Midcap 400 futures contracts for many different reasons, such as the following:
- You can use it to hedge your position in the equity market, which is what many institutional investors do
- As an investor, you can use it to diversify your investment portfolio
- As a trader, you can use it to speculate on the direction of the S&P Midcap 400 index and profit from short-term price changes — since futures allow you to trade on margin, you can potentially make more profits trading it than trading the ETFs on the equity market.
What is the contract size?
One contract unit of the E-mini S&P Midcap 400 futures is equivalent to $100 x the index’s value. The total dollar worth of a contract depends on the current quote of the index. Given the current quote of 2585.8, as of writing, the total USD worth of one contract unit of the E-mini S&P Midcap 400 futures (EMD) would be $100 x 2585.8 = $258,580.
What is the tick size?
The tick size of one contract of the E-mini S&P Midcap 400 futures is $10.00 for outright trading on Globex and $5.00 for BTIC and Calendar Spread.
What is the minimum price fluctuation for E-mini S&P MidCap 400 futures?
The minimum price fluctuation for E-mini S&P Midcap 400 futures is 0.10 index points for outright trading on Globex and 0.05 index points for BTIC, and Calendar Spread.
Are there any ETFs?
Yes, there are quite a few ETFs that track the S&P Midcap 400 index. These are some of them:
- iShares Core S&P Mid-Cap ETF (IJH)
- SPDR S&P Midcap 400 ETF Trust (MDY)
- SPDR Portfolio S&P 400 Mid Cap ETF (SPMD)
- Vanguard S&P Mid-Cap 400 ETF (IVOO)
What factors affect E-mini S&P MidCap 400 prices?
Some of the factors that can affect E-mini S&P Midcap 400 futures prices include:
- The movement of the larger component stocks of the index
- Macroeconomic reports, such as CPI, GDP growth rate, interest rates, etc
- Interest rate changes
- The state of the economy
- Sociopolitical events
- Natural disasters
What is the all-time high for E-mini S&P MidCap 400 futures?
According to the TradingView chart for E-mini S&P Midcap 400 futures, the all-time high is 2924.2, which it reached in November 2021.
What are the biggest risks in trading E-mini S&P MidCap 400 futures?
When trading any type of futures, the biggest risk comes from adverse price movement, especially given the fact that futures are leveraged instruments. The losses from adverse price moves are calculated using the actual value of the contract size traded rather than the margin deposited. So, if you trade with a 20x leverage, a 1% adverse move would lead to a 20% loss in your account, while a 5% negative movement would wipe out your account.
What is the settlement method?
What is the settlement procedure?
The settlement procedure is by cash and is calculated based on 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 E-mini S&P MidCap 400 futures?
50 contracts for BTIC on E-mini Standard & Poor’s Midcap 400 Stock Price Index Futures
What is the difference between E-mini S&P MidCap 400 futures and the Forex instrument for E-mini S&P MidCap 400?
CFD trading differs from futures in that futures contracts have fixed expiration dates, while CFDs can be traded indefinitely. Most CFD brokers that offer E-mini S&P Midcap 400 CFD simply track the index and not the futures.
Which forex instrument is the same as E-mini S&P MidCap 400 futures
E-mini S&P MidCap 400 CFD
What are some important dates for this market?
These are a few of the important dates for the E-mini S&P Midcap 400 futures market:
- 1991: the S&P Midcap 400 Index was created
- 2002: the E-mini contract debuted on the CME platform
- November 2021 when the e-mini futures market made its all-time high of 2924.2
What is the highest E-mini S&P MidCap 400 has ever been — its all-time high?
According to the TradingView chart for E-mini S&P Midcap 400 index, the highest price the index has ever reached was 2925.93, which happened in November 2021.
What is the lowest E-mini S&P MidCap 400 has ever been — its all-time low?
According to the TradingView chart for E-mini S&P Midcap 400 index, the lowest price the index has ever reached was 119.43, which happened in June 1991.
Trading equity index futures is a good way to hedge risk, diversify your trading portfolio, and potentially make more money. If you want to trade the S&P Midcap 400 futures, it is important to use the right E-mini S&P Midcap 400 futures strategy.