What Are The E-Mini S&P Futures?

The E-Mini futures were originally launched in September 1997 to attract non-professional investors into trading index futures. Previously, the only game in town had been the “large” SP contract – but it had become too expensive for the ‘little guy’ to trade. So the CME created the E-Mini contract which was 1/5th the size of the “large” S&P 500 futures contract and required 1/5th the margin to trade.

Over the past decade the E-mini has become a huge success. Not only with retail but with institutional traders too. Now everyone trades the E-Mini: mutual funds, pension funds, hedge funds, insurance companies, high frequency trading (HFT) firms, trading syndicates and individual/non-professional traders. And we here at Evil Speculator are no exception as the E-Mini has always been a mainstay of my trading activities. Right around the launch of this blog in 2008 I was researching various ways of better measuring participation and trading momentum in the E-Mini and in the process developed a market oscillator I ended up calling the Zero.

What Is The Zero Indicator?

The Zero is a simple to use but at the same time sophisticated and accurate market trend and momentum indicator. Its purpose is to alert us when an trend reversal in the underlying is about to unfold. Thus it should not be considered a lagging indicator – actually quite to the contrary. The optimum time frame for this indicator appears to be an hourly chart, therefore it is thought to be best used for medium term trading (i.e. trades lasting several days to maybe a little over a week).

Intra-day the Zero Lite on the right side of the chart is where all of the action is. Short term traders have come to appreciate the appearance of price/signal divergences which often are precursors of developing short term trend changes. Seasoned traders may also find value in the Zero by correlating their own analysis with the indicator running against a major average such as the S&P 500, Dow Jones, or NASDAQ.

Sign Up Now For The Zero Indicator!

If you have any questions or suggestions then feel free to drop me a line.

See The Zero In Action

You can read the tutorial below but quite frankly the best way to realize the potential and advantages the Zero indicator offers is to watch some of the wrap up videos I have produced in the past few years. Not only are they entertaining but they also highlight key observations such as divergences, reversal signals, waning participation, trend day tape, etc. Shown below are some of the highlights but there’s quite a bit more in our Zero videos page.

How To Use The Zero

The idea behind the Primary Zero indicator (PZI) is to get positioned at the very cusp of trend reversals. The average period of a trade is measured in days, thus no haste should be taken when initiating trades. The Zero Lite on the right side of the live chart should be mainly used for intra-day swing trading.

The Mole Oscillator

Sandwiched between the price chart and the Zero Indicator you find the Mole Oscillator, […]