Trading Futures vs. Trading Stocks

I have traded futures for ten years quite succesfully.I have never traded stocks and would like to know what people think the difference is,what strategies can be applied to both and what can't.What do you think are advantages to trading one vs. the other.

 

Futures are much easier to short (no uptick rule, no need to locate shares to borrow). Futures have favorable tax treatment (in the U.S.). Futures have the problem of expiration/contract rollover. The stock market seems to be more automated (except for e-minis).

Stocks seem to be more mean-reverting than futures.

Those are the main differences I can think of.

 

what about single stock futures?

 

I think the biggest draw of the Futures market is the liquidity. For rapid-fire traders, the stockmarket doesn't offer sufficient liquidty.

 

The futures are purely technical: none of those annoying fundamentals to get in the way.

 

'The futures are purely technical: none of those annoying fundamentals to get in the way.'

wot planet u from?

youve posted some good stuff in the past - did you let your little sister post for u?

 

As a futures' trader, you have probably focused on just a few markets over the last ten years. This means that you have an intimate feel for intraday, short tem and long term market activity in these markets. This gives you the ability to anticipate moves in these markets just before they occur.

When switching to the equities market, one pitfall that you may fall victim to is to try to find trading opportunities in the entire universe of stocks, which is in excess of 13,000+ stocks. The one problem with this is that each stock has its own market activity characteristics, which you may not be able to decipher in a short period of time, unless you have the talent and experience in doing this type of thing.

What some traders do is focus on just a handful of highly liquid stocks to trade. This way they have a sixth sense of market activity in these stocks, which allows them to anticipate trading opportunities, just as you have in the futures' market.

Charles

 

As a rule of thumb, futures traders need to control their risk better because the leverage factor can cause a faster wipeout than in stocks.