People keep asking me how to trade Taiwan index futures. Basically, it’s just tracking futures contracts on the Taiwan Weighted Index, and using them as a tool to go long and short. What’s most attractive is that you can trade in both directions, use leverage, and even take advantage of the overnight session—so many investors are playing them.

Taiwan index futures mainly come in two types, commonly referred to as the Big TAI and the Small TAI. The Big TAI uses a multiplier of 200 New Taiwan Dollars, while the Small TAI uses 50. So the contract value of the Small TAI is one-quarter of the Big TAI, and the margin requirement is much lower. If you’re brand new, the Small TAI is a good option, with relatively more manageable risk.

When it comes to what “Taiwan index near full” is, that’s actually a common question among beginners. Simply put, “Taiwan index near” refers to contracts in the nearest expiration month, which have the best liquidity; adding the character “full” makes it “Taiwan index near full,” meaning it includes complete quotes for two trading sessions. The Taiwan Futures Exchange has two trading periods each day: from 8:45 AM to 1:45 PM in the regular session, and from 3:00 PM to 5:00 AM the next day in the after-hours session. If you want to see complete data covering both sessions, you need to check “Taiwan index near full” or “Small TAI near full.”

You must deposit margin before trading. Taking the Small TAI as an example: the initial margin is about 46,000, and the maintenance margin is 35,250. Many beginners get confused and think margin is the actual amount they put in, but that’s not the case. For example, if you deposit 46,000 as margin to open 1 Small TAI contract, the actual investment behind it may exceed 750,000 (calculated at an index of 15,600 points), and leverage can reach more than 17 times. That’s why risk management is so important.

So how do you place an order? After entering the trading platform, select the contract, enter the number of contracts and the price, and choose to buy or sell. Order types are usually ROD, IOC, and FOK; most people can use ROD. After the trade is executed, your account value will move based on profit and loss—this is called “mark-to-market valuation.” You must monitor your account value to ensure it doesn’t fall below the maintenance margin; otherwise, you’ll be forced to liquidate your position, commonly known as a margin call leading to liquidation.

Closing a position is simple: you place the opposite trade. If you bought, you sell; if you sold, you buy, and the quantity must be the same. If you choose an automatic position type, the system will automatically close your previous position.

When it comes to trading strategies, short-term traders mainly rely on technical analysis. Moving averages, RSI, and MACD are the indicators I use the most. The 50-day and 200-day simple moving averages are the basics—if the index is above these lines, the trend is usually upward. When the 50-day line crosses above the 200-day line, that’s a good buy signal; the opposite crossover is a sell signal.

I use RSI and MACD to confirm trend reversals. Bearish divergences are especially useful—when the price makes a new low but the RSI reading is higher than the previous low, it often means the downtrend is about to reverse. When the MACD line crosses through the signal line, it can also provide clear buy or sell signals.

Risk management is the part I care about most. Because of leverage, losses are magnified, and in theory the maximum loss from short selling is unlimited. So I always set stop-loss points. A more secure approach is to buy index options to hedge: when buying Taiwan index futures, also buy put options; when selling Taiwan index futures, buy call options—this way, your risk is locked in.

Another practical tip is rolling over positions. When a contract is nearing expiration, you need to close the old contract and open a new one. The most convenient method is to use “spread orders,” which handle both trades in one go, so you don’t have to execute them separately by hand.

Finally, it’s worth mentioning that the price of Taiwan index futures and the weighted index price can differ, mainly due to dividend and interest rate factors of the constituent stocks. But the closer you get to the expiration date, the closer the two prices become, and eventually they will be equal.

If you’re just starting out, I recommend practicing first with the Small TAI to build good risk-management habits, and then consider increasing your position size. This market has high leverage and fast volatility—without solid homework and risk-control awareness, losing money is only a matter of time.