General: Eminis vs. stocks

Discussion in 'Index Futures' started by Janitor, Jul 23, 2002.

  1. Janitor

    Janitor

    I'm new and have been reading tons of threads, but I want to ask some general questions...

    It seems a lot of people have forsaken dayrading altogether for futures trading. Is it more profitable? Is it easier?

    What are the tax advantages?

    Is it as fun as trading equities?

    One thing that concerns me is I see a lot of people urging others to trade eminis, but I don't see many talking about how well they're doing trading eminis. I see a lot more people talking about getting killed trading eminis.

    I am mainly curious about eminis because I see a day when my trading style might become quasi-obsolete. I swing trade and pick bottoms. I need volatility and a market moving directionally and not within a small range. This amazing volatility won't last forever.

    So, in genral terms, what's the verdict on eminis? Clearly superior? Clearly more profitable? Or not clearly any of the above? Seems a little dry to me, but hey, making money is always fun. I do like stock trading though.

    THX.
     
  2. Tasuki

    Tasuki

    Janitor,
    It's true that most people lose money when they trade the eminis. I'm just getting started now, and the trading system I'm following seems to do a pretty amazing job of picking the turning points in the eminis. It's a damn expensive system ($3,500) but it does seem to work. It's based on the fibs (no surprise there) and I strongly recommend you look into some sort of fib/pivot/probability band trading method if you go into the eminis.
     
  3. Janitor

    Janitor

    thanks. I trade stocks successfully from instinct alone. All I want is a chart and volume indicator... You can accurately deduce ema's and technical indicators from instinct with experience.

    I have a distaste for using systems and follwing indicators, which tells me that I may not like trading eminis. I know I would want to trade them on instinct alone, but I really don't know how well that would work, or if it even could, regardless of experience. I imagine trading eminis is more rote and left-brain than I'd enjoy.

    Anyone trade eminis successfully without a 'system,' or without using a slew of indicators?
     
  4. ddefina

    ddefina

    Janitor, I used to swing trade stocks (successfully), and still plan to continue again in the near future, but have focused on mastering the emini's the last few months. I quit swingtrading because the profitability went down for me in March 2002, and holding overnight was getting too tense for me. I'll start back up again soon to diversify my trading.

    My first month I burned through a few grand learning the ropes, but now make money almost everyday with the ES. I don't use any indicators, just price and trendlines for reference.

    The intraday action is similar to the daily action of a good stock most of the time. The liquidity is so good you can move millions of dollars long and short without a blink (not there yet but will be). Some days with no volume, things get choppy, and you'll lose money no matter how good you are, but on those days I just sit the middle out and trade the morning and last two hours.

    The downside to them is they let you open an account with $5,000 and you forget you're trading $50,000, so it's easy to burn cash at first. Days like today, each emini contract was going up and down $500 every 10 minutes, so if you were undisciplined and on the wrong side of the trades, you'd be out of cash fast. Today was the most volatile I've seen in my 3 month history, and I hope it stays this way!!

    If you start trading them, and know how to trade stocks, plan on losing 3-5K learning the ropes. The tax advantage is 60% long term capital gains treatment.
     
  5. nkhoi

    nkhoi Moderator

    Originally posted by Janitor
    I'm new and have been reading tons of threads, but I want to ask some general questions...

    It seems a lot of people have forsaken daytrading altogether for futures trading. Is it more profitable?


    it depend but since it offer more leverage expect to win more and lose more

    Is it easier?
    what do you think

    What are the tax advantages?
    60% of profit is treated as long term capital gain even you hold it for only a half a second, weird huh.

    Is it as fun as trading equities?
    only if you make money

    One thing that concerns me is I see a lot of people urging others to trade eminis, but I don't see many talking about how well they're doing trading eminis. I see a lot more people talking about getting killed trading eminis.
    you are totally correct.

    I am mainly curious about eminis because I see a day when my trading style might become quasi-obsolete. I swing trade and pick bottoms. I need volatility and a market moving directionally and not within a small range. This amazing volatility won't last forever.
    as more investor? daytrader? drop out market will be quiet as a grave

    So, in genral terms, what's the verdict on eminis? Clearly superior? Clearly more profitable?
    yes, yes if you can trade

    making money is always fun.
    yes

    THX.
    sure!:cool:
     
  6. lojze

    lojze

    What means contract in money value when trading eminis?

    Let's say I have 5K to trade Nas Eminis. How many contracts can I buy?

    Why is so easy to loose money with Eminis? Because of really big volatility?

    Does certain indicators not work with eminis?


    Lojze
     
  7. First of all...no matter how long you've been successfully trading stocks...if and when you decide to change financial instruments to the Eminis....

    You'll be a newbie all over but with a less expensive learning curve.

    Most stock strategies have low reliability when applied to the Eminis.

    Reason why I think many successful stock traders are having so much difficulty with the Eminis because they are applying stock trade setups to the Eminis.

    Simply...your going to have to learn a new group of trade strategies or make some criteria changes to your trade setups.

    If you understand supply/demand and now how to exploit the psychology of the markets...you'll do well in Emini trading

    Secondly...since you mentioned your a swing trader...I wouldn't recommend swing trading the Eminis as a newbie until you've been successfully daytrading it.

    However...the good thing about Emini swing traders...you can watch and monitor your position all night...unlike stocks.

    My verdict is this...if your already successful trading stocks...stay with it unless your simply looking for a new toy to play with here and there...a few days a month.

    You already have an enourmous advantage to most switching to the Eminis...you know what it takes to be disciplined and understand the psychology aspects of trading the markets....

    such is easily transferable to other financial instruments.

    Too many new Emini traders make the switch after not being successful at stocks and only after the limitations of the pattern daytrader rules for stocks...such traders are getting burnt (losing their shirt) while trading the Eminis.

    I know a lot of successful stock traders that are now successful emini traders....

    I can say this...their income level is about the same...less stressful trading...lower overhead trading costs...better market intuition via studing and trading just the NQ or ES...less market research and so on...soon I expect because everything is less (trading expenses)...the year-end result will obviously show more of a profit.

    Thus, the paragraph above is in reference to successful traders making the switch to Eminis this year.

    Those that have been at it more than a year...are more profitable.

    Thus, based on the last 3 paragraphs above...if your already successful at stocks...it's worth it to switch.

    As for the Tax Advantages...much better as an Emini Trader than a stock trader.

    Note: I'm not an expert in tax issues.

    P.S. The volatility in the Emini will never dry up...there are a minimum of at least 3 intraday trends of +5 points or more...each.

    The trends in the Eminis...have clearer trade setups...less susceptible to one particular companies earnings report (when was the last time you were swing trading one stock to see its price being affected by another stock that just released earnings or major news?)

    NihabaAshi
     
  8. Publias

    Publias Guest

    I think you will do just fine Janitor...

    I trade my highly educated belly on the futures and do quite well... Feel free to PM if you would like to talk more...

    PEACE & Goodtrading,
    Publias
     
  9. egildone

    egildone

    I have my money with fidelity and can't trade eminis. Where do you trade eminis?

    Also, is trading the QQQ similar to trading eminis or stocks?

    Ed
     
  10. Lojze...you can find all your Emini contract answers at http://www.cme.com

    I do know some traders that trade successfully (making a living) without using indicators...

    just the same...I do know some traders that trade successfully (making a living) via indicators...

    regardless if your using a mechanical or discretionary trading system.

    Also...see my previous post to Janitor about why it's so easy to loose money in the Eminis.

    By the way...I'm a discretionary trader that's very dependent upon indicators: Volume, Bollinger Bands, Price Moving Averages, Stochastics all working nicely together.

    Thus, the main problem with many traders that have posted that you can't do this and you can't do that with indicators is this...

    just because something doesn't work for you nor has any value to you...doesn't mean its not working for someone else.

    I recently met a guy that trades by the stars (astrology). I personally think it's a joke...but hey...he's making money via it and who am I to tell him (I may tell someone else) it doesn't work. :cool:

    No matter what you use...try and keep it simple as a newbie and gradually (slowly) progress to more advanced trade setups after only being succesful with the simple stuff.


    NihabaAshi
     
    #10     Jul 23, 2002