Under $25k traders should NOT go Professional

Discussion in 'Trading' started by candletrader, Aug 1, 2001.

  1. Professional and exchange fees at Pro firms often add up to $500 a month.

    By trading carefully and not letting risk getting out of hand with personal capital (as opposed to leveraged capital), trading with say $15k of personal capital at a pro firm will be difficult to say the least.

    Under $25k traders should stay as retail investors, and simply switch to trading single contracts of futures for low fees and virtually zero overheads.

    Futures daytrading will boom as a result of the decline in stock daytrading.
  2. DT-waw


    You're right candle. And what about volume on ECNs? Most of orders routed to ECNs come from day- and swingtraders. With new SEC rule, many traders will move to futures.

    I think that NQ100 E-minis are the best instrument for day trading. very liquid. Volume 100,000 daily. Each contract has a value of about 34,000 dollars, so daily dollar wolume is about 3.4 bilion dollars. Let's compare that to stocks. On Island active stocks reach volume of 4 mil. shares. That is about 150 - 300 milion dollars in dollar wolume.

    On futures market there's no STUPID uptick rule. High leverage instrument. With 7,000 bucks you can open a position worth 34,000.

    And spreads. Most of the time spread is one tick, 0.5 point.
    With one contract that is 10 dollars. And on stocks? Spreads are changing all the time. On average spreads on stocks seems to be around 5 cents. If you trade with 1000-share lots spreads can cost you 50 bucks.

    Next thing - commisions. IB charges 2.95 per contract worth around 34,000 dollars. To open a position in stocks worth that much, you must buy around 500 - 1500 shares ( depends on stock price ). With IB it will cost from 5 to 10 bucks in commish.

    I'll be glad to see your comments.
  3. tntneo

    tntneo Moderator

    I remember when I started at my firm. I was only interested in stocks, and the others were looking at me with a strange smile. [we do stocks for clients and futures for revenues].

    Now, I changed side and will not leave index futures.
    In another thread someone did point out the drawback I agree with : futures are traded by experienced traders [mostly because if you are not your chances to survive long are pretty slim imo], so it is tricky.
    Sometimes stocks can be easier.

    Anyway, one is not better than the other. Although I do think more daytraders should consider it if they are in trouble with the new SEC rule [for minimum capital requirement, tax advantages, leverage, lower commissions etc..].

  4. Yup,

    Futures are the way of the future. The stock market will be a dead arena after the regs kick in.
  5. Cesko


    I think people exaggerate the effect it's going to have on liquidity.
  6. Pssst


    I am 100% agree with cndtrader....When people will realize that the "future" market is the only logic way to trade stock market will lose a lot of popularity. Just a matter of time. I still don't understand why daytraders still trading stock. I can't get it.

    Propably they never did math101 course....:)
  7. OK... I agree futures and options are the future. Where does one go to learn the ins and outs of this form of trading? Books... Videos?
  8. I think that you guys are forgetting what was the main reason of the surge in interest for daytrading stocks in the first place.
    It was Level II software and the fact that at least in theory playing field became leveled. Level II stock daytrader can be compared to Black Jack counter who is able to slowly but surely exploit 1% advantage per hand that he has over casino.
    On the other hand getting into trading futures is like entering a poker game with experienced card sharks in a casino that charges certain amount per hand and on top of that being drunk.
    Just the fact that you CAN trade futures doesn't mean that it is a good idea, especially for newbies.
  9. michaelday,

    Level2 WAS great before the MMs started manipulating it. The only way to play nas these days is the charts. Futures are played by the charts too. There is no MM manipulation on the futs, cos there are no MMs.
  10. tntneo

    tntneo Moderator

    Oh yeah ! They can be tough in low volume situations because they have much more money than I do.

    On the other hand, trading is trading. When you know how to do it for stocks you can do it for futures. Not all styles work of course. I don't think you can scalp [maybe it can be done, I dont think so]. But swings, SR, momentum, fades, break out, name it and you can do it.

    I did point out already that newbie should stay away. Not because they will never succeed, but because it goes so fast that you might be broke before you learn how to do it.
    That's true for stocks to, but at least with stocks you may start with small size and learn.

    For the rest, no need to make such a big deal about futures. it's just a great instrument when trading for income.

    #10     Aug 1, 2001