What is the S&P 500?
The Standard and Poor’s 500, or S&P 500, is an index that tracks the 500 highest-performing companies listed on the New York Stock Exchange. This index is a benchmark of the US stock market, and is one of the most liquid markets (it is extremely volatile and easy to buy and sell on it), which makes it a great option when deciding what to trade.
S&P 500 Trading Mediums
When it comes to the S&P 500, it is important to know exactly what you are trading. There are several ways to access it, including options (SPX) and the ETF (SPY), but our focus here is on futures, specifically the E-mini S&P 500, or /ES. This is the most common vehicle for day trading the index, offering broad accessibility and tight liquidity. This is the most common way to day trade the index, and allows us the most relative ease. This can be traded through many different mediums; however, S&P futures are a product of the Chicago Mercantile Exchange (CME Group), so all price charts and data sourced directly from them, and all orders are filled on their exchange.
Price Movement
The S&P 500 price moves in points. S&P 500 E-Minis, or /ES, has 1 point at a value of $50. Within a point is 4 ticks, each worth $12.50. When you enter a trade of 1 contract on /ES, this is how much your profit or loss per each point and tick movement. However, when entering multiple contracts, that price movement is multiplied.
For traders with less capital or a lower risk tolerance, there is also the Micro E-mini S&P 500 (/MES), which is one-tenth the size of a standard mini. This allows people with less capital or risk tolerance to still trade without worrying about having too much money in at a given time. Micros, or /MES, have points worth $5 and ticks at $1.25, which is far more digestible for novice traders.
Index Qualifications
A dedicated index committee reviews candidates quarterly and makes final decisions based on both financial data and broader market representation. Companies that fall below these standards, get acquired, or are delisted from a major exchange are removed and replaced, keeping the index a current reflection of the most significant companies driving the U.S. economy. Even the most powerful companies in the world eventually fall. Kodak controlled over 80% of U.S. film sales and was one of the most recognized brands on the planet, yet filed for bankruptcy in 2012. Enron was ranked 6th on the Fortune Global 500 and was generating over $100 billion in reported revenue before collapsing overnight in fraud in 2001. Lehman Brothers, a 158-year-old institution and the fourth largest investment bank in the United States, held $639 billion in assets before becoming the largest bankruptcy filing in American history in 2008. Nokia was the largest mobile phone manufacturer in the world for nearly a decade, controlling over 30% of global market share at its peak, before smartphones made them irrelevant. Sears was the largest retailer in the United States for most of the 20th century before filing for bankruptcy in 2018. The index does not fail with them. It removes them, replaces them with the next generation of market leaders, and keeps moving. This self-correcting structure is what makes the S&P 500 uniquely resilient as both a long-term investment vehicle and a stable instrument for active traders.
Overall, the S&P 500 is an ideal asset to trade due to its liquidity and ease of use. It is historically a bull market, driven by the sustained growth of the 500 companies it represents, and carries a high correlation to a broad range of other tradeable assets. Regardless of your focus, keeping an eye on the S&P 500 is always worthwhile. The index itself is maintained by Standard and Poor’s, a financial intelligence company and division of S&P Global, which has tracked U.S. market performance since 1957. Inclusion is not automatic; rather, companies must meet strict criteria including a market capitalization above $22.7 billion, positive earnings over the prior four quarters, and sufficient trading volume and liquidity.
- From the desk of Declan Otañez
Works Cited
Boyte-White, Claire. “Liquidity and Liquid Assets: Key Differences Explained.” Investopedia, Investopedia, www.investopedia.com/ask/answers/052515/what-difference-between-banks-liquidity-and-its-liquid-assets.asp. Accessed 20 Feb. 2026.
Team, The Investopedia. “S&P 500 Index: Evolution, Significance, and Economic Impact.” Investopedia, Investopedia, www.investopedia.com/ask/answers/041015/what-history-sp-500.asp. Accessed 20 Feb. 2026.
“E-Mini S&P 500 Overview - CME Group.” Futures & Options Trading for Risk Management - CME Group, www.cmegroup.com/markets/equities/sp/e-mini-sandp500.html#tab_2q0MCAi=es-futures-vs-etfs. Accessed 20 Feb. 2026.