Micro contracts are a type of futures contract that are smaller than standard futures contracts, making them more accessible to individual retail traders. These contracts offer a way to trade in the futures markets with less capital and lower risk exposure compared to standard contracts.
For example, a standard S&P 500 futures contract (ES) might have a contract size of $50 times the S&P 500 Index, while its micro equivalent (MES) might be $5 times the S&P 500 Index. This smaller size allows traders to fine-tune their positions and offers more flexibility in terms of risk management.
In general micros are 10% of the cost, position and risk of a full sized contract.
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