Suppose now that you indeed had a grand in your futures account with a broker that set the emini day trading margin at only $500. Suppose also that what you wanted to trade is ES, the emini contract of S&P 500. Since one point of this instrument is equal to $50 and its price is these days (April 2007) about 1450, it is quite easy to find out how much dollar value you can control with your $1,000. It is simply $50*1450=$72,500. That's right: your paltry $1,000 (or even $500 in principle, though only theoretically) can control as much as $72,500!

Now, with the same amount ($1,000) you would be able to control at most $2,000 of a stock value provided you had a margin account. That is how great leverage futures offer. It is, in fact, huge compared to virtually all other trading instruments with the exception of currency pairs, where the leverage in question can be even greater, and spread betting which gives you a comparable power of leverage.

Obviously, it is important to remember that the leverage this high is a double-edged sword and because of this it should be used judiciously. What this means for most traders out there is that perhaps they should simply stick to stocks.

You can find more information about eminis and how to trade them on the author's website at: http://www.eminimethods.com/emini_basics.html

Waldemar Puszkarz, Ph.D., is a web veteran with 15 years of web surfing under his belt. By training, he is a theoretical physicist, but his interests are much broader than science and include trading financial markets, sports betting, poker, and researching online business opportunities. He is also an avid book reader and sports afficionado. Currently he is making his living mostly as a day trader. He has been in the trading trenches for almost a decade during which he has traded a variety of financial instruments.

He is the owner and webmaster of Eminimethods.com (http://www.eminimethods.com) which provides free common sense trading education and simple trading systems for e-mini and stock markets as well as reviews of honest online business opportunities in Meet HOBO (http://www.eminimethods.com/HOBO.html) section of his site.