Day Trading during the COVID-19 Pandemic

Coronavirus has the US and most of the world on a near-lockdown. Many businesses are reducing capacity or temporarily closing, and people are self-isolating.  The US markets appear to be in freefall despite the Federal Reserve’s emergency measure to cut rates to near zero.

But despite appearances that the world is somehow crashing down, there is always opportunity to be found in every crisis. You just have to know where to look. There has been unprecedented market volatility, given the uncertainty of the coronavirus impact on the economy. Risk? YES. Opportunity? YES.

As a result of the increased market volatility, day trading margins have increased

Many FCMs have raised their day trading margins to the full maintenance margin, in some cases even higher. Those who have not fully eliminated day trading margins have significantly raised them to levels that many retail traders can no longer afford.

What not to do:

Don’t trade the standard e-minis indices if you don’t have sufficient capital!  This is a recipe for hefty liquidation fees or even a possible debit call.

What you might want to consider: Micro E-mini indexes

Trading the Micro E-mini indexes–the Micro Dow Jones (MYM), Micro S&P 500 (MES), Micro Nasdaq (MNQ) and Micro Russell 2000 (M2K)—may provide an opportunity exploit the current volatility in U.S. stock indices.

Here’s why:

  • The Micros represent a tenth of the risk exposure compared to the standard E-minis.
  • More importantly, the Micros require only a tenth of the margin of standard E-minis.

What’s the Potential Margin Advantage of the Micros?

Let’s suppose that an FCM has raised the Micro E-Mini S&P to full margin–that’s only around $990 per contract (as compared with the current margin for E-Mini S&P – $9,900).

But what if an FCM still offers Day Trading Margins but at double the standard Day Trading Margins? Then, your Micro E-Mini S&P might have day trading margin may be as low as $100 instead of the usual $50 per contract!

In short, when it comes to trading U.S. indices, the Micro E-Mini indices are going to be your cheapest option.

Keep in mind that day trading margins vary depending on FCM and daily market conditions. Margins subject to change without notice.

Bottom Line: Don’t Get Sidelined by the Coronavirus-Driven Margin Increases. If you are interested in trading Micro E-Mini indices on your current trading account or opening a new account, call our office for more information.





Please be aware that the content of this blog is based upon the opinions and research of GFF Brokers and its staff and should not be treated as trade recommendations.  There is a substantial risk of loss in trading futures, options and forex. Past performance is not necessarily indicative of future results.