The Best Way to Start Trading Energy Futures

Want to participate in the energy markets, but you're new to futures trading, have limited trading capital, or simply wish to minimize your risk? E-Mini Crude Oil futures are just 50% of the size of a standard futures contract, and they trade totally electronically, nearly 24 hours per day. The E-mini Crude contact is a great way to get involved in the energy markets, but the smaller contract size means correspondingly less exposure to the market and less risk. E-Mini Crude futures trade under the symbol QM. There is also an E-Mini Natural Gas contract, which trades under the QG symbol.

In case you didn't hear, the New York Mercantile Exchange just recently listed E-Mini Unleaded Gasoline and E-Mini Heating Oil futures, too, on January 16th. These contracts are one-half the size of the floor traded contracts, which means they represent 21,000 gallons. The minimum price fluctuation will be $0.002 per gallon, or $42.00 per tick. February 2006 will be the first month offered. All contracts will be cash-settled, so there's no need to worry about having to make or take delivery of the underlying commodity. The trading symbol for E-Mini Gasoline is QU, and the symbol for E-Mini Heating Oil is QH.

Getting started with E-Mini energy futures can help you develop a disciplined, rational trading strategy, without excessively focusing on profits and losses. When trading full-size crude oil contracts, traders with relatively small balances tend to fixate on their equity fluctuations and sometimes base trading decisions on emotional reactions to these fluctuations. Many traders, for example, resist closing-out unsuccessful trades at a loss, because they hope that the market will turn in their favor. Conversely, many tend to immediately take profits when the market moves in the desired direction, rather than maximizing their gains by allowing profits to run. With less capital at stake when trading E-Mini energy futures, however, you can develop a disciplined trading methodology -- as well as the confidence needed to be a successful futures trader -- without the anxiety and distractions that come with large P&L swings.