How to Improve your Stock Trading via Futures Trading

hey ya!

I've been trading futures for a bit now. Then I tried to venture back into stock trading because I haven't done it a while. And guess what? My stock trading has improved DRAMATICALLY!

It's like I'm a new man. A different person. I hold onto my winners for much much longer than when I was a pure stock trader. I held on for hours and in some case almost an entire day as the stock moved in my favor. I wouldn't have been able to do this before. I'm basically getting big chunks of an entire move.

I think this is the result of trading a much faster moving market - futures. And when I go back in stocks it's like watching a slow motion movie! haha. So, I become alot more patient on entries and exits. Of course, as soon as i'm wrong I get out. I'm never patient on losses.

Try that ET traders! Trade futures for a while then get back to stocks. You'll surprise yourself. Well, perhaps it has nothing to do with futures trading(?) and just that I've improved as a trader? Hmm.. I don't know. But it feels good.

good luck ya!

trader99

 

Any Futures traders noticed this "slowing down" effect when you try to trade equities again?

Just curious. I remember some Market Wizard saying how they trade equities differently than futures. It's usally they are more patient and less panicky..

 

maybe it's because stocks are easier to trade than (index) futures??

i'm assuming you're talking about index futures here...

this is a cool thread...

 

Trader99,

Wow, Great point.

Something clicked for you. That's what it's all about.

Great. That is so true. I saw signs of that observation myself, but never put it together.

Adaptation at it's finest. Thanks for the post.

 

bungrider,

Yes, I'm talking about index futures, which is probably not the easiest thing to trade.

However, I don't know if stocks are "easier" to trader than futures per se. I think they are about the same. So, I've used the EXACT same strategy in both cases. But I'm talking about what's goes inside your head. You know the "psychological" aspect of trading and holding onto winners, cutting losers, not shaken out etc. etc. I think those things are far more important than the vehicle you trade or even the particluar strategy.

But what I'm really interested is in how one's psychology changed! It's like living life in the fast lane for a while then when you go back to the slow lane everything becomes "clearer" and somewhat "easier". Though what you have been TRYING to do has been all the same all along. Just that you had these psychological barriers and obstacle and fears...

strange effect i think..

 

If you can trade the indexes you can definatly trade stocks. Just because you can trade stocks though doesnt mean a damn thing about trading the indexes.

Brandon

 

Hmm.. When I switched to index trading, I found it to be pretty easy to trade. No uptick rule for shorting. Nice leverage. Nice liquidity. Only one thing to look at. And I did well in index trading relative to my stock trading. I guess in some sense you can say it's "easier" than stock trading. And I still do pretty decent with index futures.

But the point of this thread was that because of the market experience with index futures, which is a lot FASTER moving than most stocks, that when I came back to the equity world it seems slower and easier to hold onto winners longer. Much longer than when I was just trading purely stock . I think the more kinds of instrument you can trade the better. It offers trading vehicle diversification.

So, now I trade both! Maybe I should add FX to the list.. But then I 'll have to go through the entire learning curve again. Being able to trade all 3 asset classes would be awesome though! If you can do that, then you can always make $$$ everyday.

 

Have you considered the possibility that maybe you used to be more impatient than you are now?

 

good for you 99.

I switched to futures ES, and since then never looked back.

Don't know if i will actually be more profitale or not trading those KLAC / QLGC or MXIM again... Futures seem to be so much more profitable with the same trading strategies.

less BS.
So why did you decided to get back to stock afterall? Which one do you find more profitable?

 

That's what I thought too. Futures is way cooler. And more profitable. I STILL TRADE futures EVERY SINGLE DAY!

I'm just saying I'm trading BOTH equities AND futures now. For a while, I was so disgusted(how many of us felt that way about stocks at one point or another? haha) with stocks that I wouldn't look at it. And all I did was futures exclusively.

Now, I think there's a benefit to trading both. For futures, I scalp more. For equities, I've FINALLY learned to do more of a longer intraday horizon - 10-20mins to hours. Before, I couldn't hold that long even if I knew the trend was going my way.

The main point is the change in psychology. So, it doesn't matter what instruments you trade but I finally developed the "correct" habits of holding onto winners as long as necessary and cutting losers fast. Now, it would be nice if I could have the same patience on the futures side then I'll be really ringing it in on good index trending days.

But to answer your question, for now, futures is more profitable because of leverage effect. It doesn't take much movement to ring in the register in futures. Even on a few contracts you can do OK. But I'm surprised that I'm practicing good trading habits on stocks. Maybe after a while, I'll transfer some of that patience back into futures, then I can be a Market Wizard. hehe. Well.. maybe not. At least a better trader than I've ever been.

wish me luck!

keke