Not Sure Which Stock to Trade? Try E-Mini Trading!

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E-Mini trading makes one of the most difficult jobs for a stock trader amazingly simple. It is a pure price play, and as such, can be fairly simple to trade. It is a great alternative to trying to be a "stock picker", as you only need to analyze the future direction of an overall index. For the purposes of demonstration, we are going to be discussing the E-Mini Dow Jones contract.

At the beginning of your trading day, you typically will want to know the general market sentiment. Typically, the trader will try to gauge whether or not the bulls or bears are going to be in control of the upcoming session. A lot of the time that can be hinted at by the stock market results from the various foreign markets around the world. As an example, an American trader will want to know how the markets in Asia and Europe fared overnight. If they are both negative, then the trader knows that the US markets might certainly continue the trend.

This brings up an important question: If you know this to be the case, which stock are you going to buy or sell? In a negative market, you might be attracted to a defensive stock. But that company also has plenty of fundamental factors attached to it as well. By the time you break down the market direction, sector rotation, possible company news for each stock you are planning on watching -- you have done a lot of work!

However, you could have just stopped at the first part. All you need to know about the markets is general direction to trade that E-Mini contract mentioned above. This makes trading much easier for the day trader, as they don't have to over-complicate things to make a decision. It's a pure price play: Is the Dow going up or down?

This type of simplicity can take a lot of the stress out of trading. You don't have to worry about CEO scandals, earnings of your particular company, or even other companies in your stock's sector dragging your trade down. Another thing about the E-Mini is the fact that it is so liquid; shorting is extremely simple as well. Because of that, while your buddies are complaining because there is nothing to buy, you can still make large profits in the down market.

Good luck, hope it helps,

Hubert

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