Index ETFs vs futures

Discussion in 'ETFs' started by sunggong, Feb 14, 2008.

  1. Which would you prefer if you were deciding between those two options?
     
  2. First it depends on how much leverage you want.

    ETFs like DDM offer 2:1 leverage. Up to 4:1 if purchased on margin.

    Futures like the E-Mini offer about 15:1 leverage (depends on the margin your broker requires)

    Futures are best suited for short term trading. Besides their leverage, futures lose some money as time passes (contango), unlike ETFs which pay dividends (or interests on 2x ETFs); so ETFs are best for long term (weeks to months) strategies.