When I was at Merrill Lynch I did more ag trading and currency trading than I do now. There is no scientific reason for me at this time to concentrate on index trading than other instruments. True, the only people I have actually trained with made their big money by trading the indexes, so by familiarity I gravitated toward indexes. That being said, I do believe that a true robust method should work on all markets. In the spirit of curiosity I have gone back and looked at soybeans and pork bellies and the methods we use seem to catch some nice trades. But I have not done a real study, nor paper traded, nor traded even a small cash account in other markets yet. Of course if a client with $5 Million dollars came up and said he/she wanted to concentrate on agriculturals or forex or oil futures, I would definitely assign someone to start the research factory, LOL. My first inclination is to specialize, at the risk of not being able to help lots of clients. On the other hand, I think many important factors that go into trading, sports, and business success can be of help universally---like positive personal reinforcement. Learning how to deal with setbacks, defeat, bad luck, bad advisors, and competition---just learning lessons in survival---is a valuable commodity. I am sure that a brain surgeon can learn to be a proctologist, and the opposite as well---I would just want them to use separate tools. But how many patients would go to: Barry Beavis ---Practice Limited to Neurosurgery and Proctology. Ask about our $10.00 trial biopsy special for first time customers. Successful trading: Alex L. Wasilewski Co-Founder & Head Trader Trades That Work www.puretick.com
This is a stupid argument for one reason: size. People who don't know the notional value of what they're trading will get thrashed, because it boils down to zero money management. 1 NQ future = $37k Which means if you can trade 400 shares of AAPL, there is no difference (except higher downside risk in AAPL due to company specific risk exposure) between that and NQ. If you're running off buying future contracts in the same numbers you are SIRI shares, then you deserve to get thrashed. Its called basic multiplication, and if you can't do that, all the other market participants deserve your money. That said, the futures are an excellent vehicle for index exposure (thus avoiding specific company risk), and to the end they can be no different than stocks. The trader needs to merely learn some 1st grade math before using them. Same goes for non-index futures, except that the value/price argument takes on a whole different context (which introduces other more difficult to meter risks).
Amen! Not all of us use the minimum performance bond requirements per contract. Some of us actually use money mangement and size according to our account equity. Gun slinging is not that sexy.
Being under capitalized Is one of the biggest no no's in trading anyways. If one doesn't have the money to trade then they probably shouldn't be trading anyways! You can open 2 equity accounts and do the same, but why would anyone hedge such a small account? If you need to hedge in this scenario you shouldn't be in the trade in the first place. So are stock commissions unless your with a broker that overcharges. $6 for a round trip on 1000 share is comparable if you ask me. I will give you that one. Don't trade illiquid stocks. I have seen some bad fills on futures especially in the YM's and the Er's. Once again don't trade illiquid stocks. Thats just your opinion, there is no factual basis to this. This is your opinion again. I know traders that get up that early to analyze futures too. Once again there is no factual basis to this one. 3 -8 contracts is no different then 300 to 800 shares. If you don't want to be filled at different prices use what they call a limit order. Worse case scenario you could get a better fill, which you will not get in futures with a limit order. What about random Fed talk, terror scares, etc. This statement has no basis either. I will resistantly conceed to this one. If you need to get in short that fast than you shouldn't be taking that trade. JMHO on this one. This one makes no sense at all! Did you REALLY say that? Please tell me you mis spoke! Another false statement. That is your opinion based on your trading experience. This statement once again is based on your experience and has no basis other than that. What if your broker doesn't allow transactions over night. Last I checked most people have to sleep to stay alive. Don't think to many people were sitting at their pc in the middle of the night worried about their position. If you got out minutes later you got wacked! Look at the chart. If I remember correctly the market ended up that day. So if you bailed in the middle of the night on futures or went short you got wacked. If you held you stocks you had a great chance of a gain. Also no gaps in the futures market? Please tell me you didn't say that! Market is always open? That is a flat out lie! PLEASE! No market makers is right, but no games is flat out laughable! Use a broker that always takes the best fill. The good brokers have setting for this. 9 out 0f 10 times I always get a better fill on stocks than futures. Its called Limit not market orders. Please don't tell me you never went in at "market" on the Ym's and got a bad fill. ------------------------------------------------ You really need to com up with better truth baring examples than what you provided. Don't take my response with a grain of salt for it not intended that way. Your just trying to make a case on personal experiences, bad trading decisions, poor execution of trading techniques etc. Both markets have their good and bad points. Some traders prefer one over the other or both. People need to trade what works best for them and stay with as long as its working.
Dino, It might be personal preference but I could not be happier trading futures. Did Equities for many years, four trading them consistently well for good profit. I now find myself with a lot more free time due to less research. Still doing the trading on paper because I'm very conservative when it comes to new approaches. However, so far, so good. I feel I am trading an instrument that is harder to manipulate. Couldn't be happier with this transition for the time being.
Neet, and that is what you should do. Trade what works best for your financially, emotionally, and so on.
Yes, futures profits are taxed at a lower rate. They are taxed at 40% long term capital gains, and 60% short term (regular income tax rates). Doesn't matter if you day trade and make 100 trades per day. 40% of your profits will be considered LT gains. When doing your taxes, you don't have to list the trades either. Just supply the 1099 numbers.
You got that backwards. Section 1256 contracts (futures and index options) are taxed 60% LT, 40% short term.