E-mini Nasdaq 100 Index Futures, also referred to as Nasdaq mini futures or mini Nasdaq, represent a specific type of Nasdaq 100 Index futures contracts. This article provides a comprehensive trading tutorial for Nasdaq mini futures, covering aspects such as margin requirements, tick value, and trading hours. Here are the key points:
- Currently, the value of one Nasdaq mini futures contract is approximately $360K, with the margin starting at $1,974.
- Mini Nasdaq futures have a minimum price tick of 0.25 index points, equivalent to $5.
Nasdaq Mini Futures Introduction
E-mini Nasdaq futures, short for E-mini Nasdaq-100 index futures traded on the Chicago Mercantile Exchange (CME), is a futures derivative tied to the Nasdaq-100 Index. The trading symbol for mini Nasdaq is NQ on the CME, so it often referred to as NQ futures.
With the remarkable performance of global technology stocks in recent years, mini Nasdaq has emerged as one of the most widely traded index futures worldwide, ranking second in trading volume only to the S&P 500 Index Futures.
Mini Nasdaq Contract Value
The contract value of Nasdaq mini futures can be calculated using the following formula:
Contract Value of Mini Nasdaq = $20 x Nasdaq-100 Index
As of this writing, the Nasdaq 100 Index is trading at around 18,000 points. The value of one contract of mini Nasdaq futures is equal to ($20 x 18,000) = $360,000.
Given this substantial scale, the “mini” contract may not truly live up to its name and could even surpass the financial means of many individual investors. Consequently, Nasdaq mini futures are predominantly utilized by institutional and professional investors for purposes such as hedging against stock positions and engaging in arbitrage trading. It’s rare for individual investors to use them to trade the Nasdaq 100 index.
Mini Nasdaq Contract Month
Nasdaq Mini futures are divided into quarterly contracts for March, June, September, and December, with the expiration and settlement date for all contracts falling on the third Friday of the contract month. For example, 21st of June would be the expiration date for the June 2024 contract (CME: NQM4)
The image above depicts a screenshot from the official CME website for mini Nasdaq futures, showcasing quotes, prices, and trading volumes for the 2024 contracts. As of early April when this was captured, the March contract had already expired, leaving only the June, September, and December contracts available for trading within the year.
Examining the last column of the image reveals that approximately 99% of the trading volume is concentrated in the June 2024 contract. This contract with the highest trading volume is typically referred to as the “front-month contract”.
E-mini Nasdaq Futures Margin
In the earlier section, it was mentioned that the current contract value of a Nasdaq mini futures contract is approximately $360,000, far exceeding the affordability of the average person. Next, let’s see the margin requirements for E-Mini Nasdaq to see if they can be lowered to a acceptable level for the general public.
The E-mini Nasdaq 100 futures margin is set by the exchanges and futures brokers and there is no fixed calculation formula. During period of high market volatility, the exchange and brokers may increase the margin requirements. In addition, margin requirements may vary among different brokers.
Generally, the margin requirement for Mini Nasdaq will be fixed for a period of time. Below are the margin requirements for E-Mini Nasdaq when the NASDAQ-100 index is traded at 18,000:
Mini Nasdaq margin for intraday trading
Initial margin: $1,974
Maintenance margin: $1,776.
Mini Nasdaq margin for overnight trading
Initial margin: $19,470
Maintenance margin: $17,700
Intraday trading refers to opening and closing positions between 09:00 and 16:00 US Eastern Time.
The initial margin for intraday trading is nearly $2,000, which may be acceptable for some individual investors. However, the overnight trading margin requirement of nearly $20,000 far exceeds the affordability of most individual traders.
Looking to speculate on the Nasdaq index with lower margin? Trading Nasdaq index CFDs requires a small margin as low as $1. Click on 「What is NAS100 in Forex Trading? How to Trade US100 CFD on MT4/5?」 to learn more details.
E-mini Nasdaq Tick Value
As mentioned in the previous section, only intraday trading of Mini Nasdaq futures may fall within the acceptable range for some individual investors or traders. In this section, we will discuss the value of the minimum price movement (price tick) of Mini Nasdaq 100 and whether it is affordable for the majority of individual traders.
As depicted in the screenshot above, Mini Nasdaq quotes are priced to the second decimal place, with a minimum price tick of 0.25 index points. According to its contract specifications, the value of a 0.25 index point per price tick is ($20 x 0.25) = $5, and the value of a 1-index point movement is $20.
Among the three major US stock indices, the Nasdaq index exhibits the highest volatility, with its daily average movement recently hovering around 2%. Based on a 18000 index level, a 2% daily average fluctuation equals 360 points, translating to a value of $7200 for one Mini Nasdaq futures contract. This amount is challenging for the majority of individual investors to bear.
Mini Nasdaq Trading Cost
The trading costs for Mini Nasdaq consist of two parts: exchange execution and clearing fees, and fee commission charged by futures brokers.
Irrespective of the futures broker used, the exchange fee for trading Mini Nasdaq futures is $1.38 per contract, per side. Meanwhile, the fee charged by futures brokers may vary, and investors can negotiate with their brokers based on their trading volume. Typically, the standard fee is $1.50 per contract, per side.
For both opening and closing a position, the total trading fees for one contract of E-Mini Nasdaq 100 Futures would be [(1.38 x 2) + (1.5 x 2)] = $5.76. Compared to the contract specifications and the minimal tick value, the trading fees for Mini Nasdaq futures are considered affordable for individual traders.
Mini Nasdaq Trading Hours
Unlike the 6.5 hours of trading time for the US stock market, E-mini Nasdaq trading hours extend up to 23 hours per day with a 1-hour session break. The trading hours for E-mini Nasdaq futures in US Eastern Time are as follows:
- Opening Time: Sunday 6:00 PM
- Closing Time: Friday 5:00 PM
- Daily Session Break: 5:00 PM – 6:00 PM
Alternative Nasdaq Trading Instruments
While it’s called “Mini” Nasdaq, in terms of contract value and margin requirements, it’s an investment that most individual investors find difficult to afford. For individual traders, there are two alternative ways to trade the Nasdaq-100 Index that may be more accessible to the majority.
1. Micro Nasdaq Futures
The contract value of Micro Nasdaq futures is only one-tenth that of E-mini Nasdaq futures, requiring a minimum margin of just $487 to start trading. Click the article below to learn more:
「MNQ Futures Contract Details: Margin Requirements for Micro Nasdaq Futures」
2. Nasdaq Index Spot CFD
Nasdaq Index Spot CFDs are derivatives based on the Nasdaq 100 Index, with a minimum margin requirement of only $1 for trading. Click the article below to learn more details:
「What is NAS100 in Forex Trading? How to Trade US100 CFD on MT4/5?」
