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Micros vs. Emini (MES vs. ES) Risk vs Reward

Risk vs. Reward of trading one Mini ES vs. trading 10 MES?
Costs for the MES are hard to overcome when scalping?


Hey @ticks, welcome to the community! This is a great question, and we can address the cost/benefit and the risks of the MES contract versus the ES futures contract.

In my opinion, most traders should trade the MES micro mini S&P rather than the mini contract ES. This is because the contract size is smaller and will have less impact on your account if you lose money on any given trade. Second, as a beginner, it may be wise to risk less money per point when learning how to trade futures. This will help you avoid losing too much money if you make a mistake. It may take some time to learn how to trade futures effectively, so using a smaller contract size can be one way to do that.

Trading fees are not reduced by 1/10 when you trade Micros. This means it can be hard to trade Micros frequently it may be harder to overcome the cost of commissions. We advise every trader to enter trades only when the risk to reward is worth it, which means you may prefer to go for points instead of ticks. Remember that tick scalping requires timely and fast execution, and sometimes retail traders may not have the know-how or equipment to trade against high-frequency firms. Again, consider time frames that allow entries and exits where slippage may have less of an impact.

The bigger contracts, including minis, are mostly used by hedgers with substantial capital. They use these contracts to protect(hedge) their investments or physical inventory. For example, they may use the ES EMini S&P to hedge a big portfolio of stocks. Another example is if they are a refinery, they might trade Oil Futures contracts(CL).

Before you start trading futures contracts, it is important to understand the size of your trades and how potential fluctuations may impact your account.

Finally, many futures traders want to graduate from trading Micros contracts to Mini contracts. We advise you to do this incrementally, going 1 lot at a time to 2 lots at a time, 3 lots at a time, etc. This will allow you to examine your risk tolerance and ability to withstand the different fluctuations in the markets. If you increase your lots, stay on that size as long as possible so you can experience as many market scenarios as possible. Again, you may find your ideal contract size that way if you do so incrementally and methodically.

Matt Z
Optimus Futures

There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
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