Futures vs stocks

Discussion in 'Professional Trading' started by Jimmy3, Oct 5, 2008.

  1. Aok

    Aok

    Since I trade both, I'll take a stab at it for you.

    First off, neither stock or futures trading is "easier". Trading is trading.

    Which one is more "streamlined"? I would say futures.

    Why?

    Usually...

    -tighter spreads (in general)
    -better leverage( unless you're trading fx or are prop stock)
    -more favorable tax treatment
    -less specific news impact.
    -when the market moves good volatility and volume

    These are just structural differences there are many others.

    But then why trade stocks if stock index futures are so advantages?

    Simple:

    Size and specifics.

    Realistically the only stock index future you can _safely_ move size (in the US)is ES and you are limited to being specific in a general way. UP or down.

    Stocks especially with hybrids like etf's you can get very specialized in your focus either individually or in a industry/sector. Like say financials. Or regional banks, or emerging markets.

    If you're moving size and have a narrow focus, individual stocks are the way to go.

    Also dont forget that current market environment is not normal so for a stock index future trader this volatility is heaven.

    But when day ranges do begin to contract, there is always a stock that is moving. You just have to figure out how to find them.

    Plus you can trade at a price you're comfortable with. Big cap/small cap. Only $40 stocks etc. Stocks are more personal also. Hard to explain but you get a "feel" for a stock when you trade it every day. Harder but possible in a more impersonal entity like index future.

    Cant do that with futures. Got to have a cast iron stomach to trade Hang Seng right now. If you only trade one index and you cant trade it anymore what do you do? What about if your bread and butter changes exchanges? Like mini russell just did. So far so good but the jury is still out. Stocks are always undergoing sector rotation. Go with the flow.

    Develop your style and be flexible.

    HTH
     
    #11     Oct 6, 2008
  2. I have yet to see a long term futures winner in the pl thread. Maybe futures traders are super shy and humble, and stock traders love to brag.
     
    #12     Oct 6, 2008
  3. I did not know one one could trade weed legally :confused:
     
    #13     Oct 6, 2008