Just wanted to get some ideas about this, I know the two are very different and what advantages exist for intraday trading, whether it be short swings, scalping, or whatever. Differences in margin, etc? Thx.
====================== Same reason some like real estate more ; more investors, more general public , more grandma/grandma, in them, than futures An advantage for some perhaps; futures probably will never encourage sleeping on the job-LOL
If you are talking only intraday trading, there are only two possible advantages that I can think of for ETFs. One, they offer a way to trade smaller slices of the market if one happens to be interested in only Telecom, Drugs, etc. Two, a trader can be more selective in how much exposure he takes on, as he is trading shares instead of contracts. But other than those two, IMO futures are by far the superior instruments.
Mainly leverage is the difference. I know my hours by trading QID and QLD, but have been thinking NQ futures can be traded nearly 24/5.
It is easier for people who are more familiar with the mechanics of the stock market to trade etf's. You use the same order entry platform, etc. There is no expiration date. You can leg in to trades with smaller size.
I never traded ETFs, but I suppose that with a, say, 3x ETF, you can get the leverage for your money without leveraging the comission costs as well. That would be a crucial advantage for day traders when compared with futures vehicles.
If you're trading with a small account, mini sized contracts may not be small enough to control risk. The smallest size you can go is 1 contract. But you can buy an arbitrary number of ETF shares to give better scalability. Of course, you run into the problem of commissions being a more significant part of your expenses when you buy < 100 shares. For instance, if your max risk is say $100 you can place your stop where it makes technical sense and size the position accordingly. A well placed technical stop on ES might be $500 away for 1 contract which would exceed your risk tolerance.
If you wanted to trade oil couple of times a year it's better to do it in etfs because other wise with futures you'll have to buy the data feed and the contract size might be too big for an everyday trader/investor.
i am also intrigued. . I perfectly understand USO.. puts calls.. do my stuff.. spreads.. etc.. everything.. I have a thinkorswim account and IB account opened with futures trading access. but I could not figure out how to simulate the same trade. may be I need some mentoring. also, one thing I noticed, I hope this is not digressing. optiions on FUTUREs, like on the CL example CL june 40 strike ./LON9P40 I have attached a screenshot. it says non standard option and may have liquidity issues.. hence atleast for me I wud prefer options on USO ETF instead of on /CL as they are more LIQUID
the main advantage of futures over ETFs (at least for daytrading) is the 60/40 tax treatment on futures profits.