I notice that this board has about 99% stock traders and a few index traders. Why is that? I searched around and Maverick posted that he has only known a hand full of successful futures traders. What makes trading stocks better than trading futures intraday? I can only come up with risk vs. reward. Stocks can move $2+ in a day which is 200 ticks. Even if the 200 ticks in the mini russell is 20 points. Also, edge gets thrown around. Why does it seem to be easier to find an edge in stocks? Commissions? If that's it, why not Forex? Look forward to your thoughts.
A few reasons. You mentioned commissions. The floor trading firms on the CME pay something like 80 cents roundtrip, hard to compete with. Futures tend to be the leading indicator of stock movements, and help considerably with entry and exits of stock positions. You can be market neutral by trading pairs and mergers...stop from getting stuck in the wrong direction. Futures is pure directional (unless you're $$ hedging stocks of course, perhaps program trading). Edges in trading the openings (don's openings in the journal thread). Tape reading comes into play. Futures are a "zero sum game" where stocks are not. You have a loser for every winner in futures, whereas in stocks you could buy stock from me and we could both "win". Dividends, company earnings, etc. add to the "sum" of the game. Random thoughts. Don PS. People love to trade those futues though, check the volume of the emini's.
futures are deceptively easy to gain too much leverage. one rookie deer in the headlights situation and you could be history. the potential is great with futures but they are very unforgiving.
I wouldn't say 99% equities. Look at some of the futures forums. I have done both, and I do not believe one is easier than the other. If you can do one, you can do the other. Personally, I prefer futures for instantaneous execution, and no specialist/ MM to fuck with your order. The tax advantages and lack of shorting rules help too. As for the zero sum game thing, thats a bonus. Lots of clueless traders out there. Just my opinion. Jay
Good points. 20 years ago almost all daytrading by retail traders was in the futures. The advent of direct access stock trading platforms, the rise of ECN's and SEC rules that stopped some of the more egregious thievery by MM's and the great bull market all contributed to stocks' popularity. Futures, not just stock index but all liquid products, remain great day trading vehicles. The lack of volatility in the indexes has made trading futures tough lately. You cna still find stocks or ETF's that have nice intraday ranges. It's tough to make money in the ES when the range is 4 or 500 points.
Actually, a very easy answer. Chicago is all about futures, New York is all about equities. Which city is bigger? Futures prop firms have made little attempt to expand, have no idea why. Meanwhile the equity "prop" firms are way too closeminded to think outside the box, they are too busy "adjusting" to the changing NYSE, no matter how many clues there are about the equity markets becoming a more & more inferior trading vechicle. But seems like most retail traders (Interactive Brokers and such) are futures traders, because of the leverage and liquidity.
I remember some posts by some new members suggesting that all they saw at ET were futures traders and wondering why so many traders trade futures in comparison to the few stock traders at ET. I'm serious. Therefore, I guess its a matter of perspective that may be dependent upon what posts you read that interest you at ET. Anyways, I think stock trading is just more advertised in comparison to futures or forex trading. Thus, most new traders tend to start with what they see the most... Stocks. Think about it...when your first thoughts about trading or wonder what it was... I bet you were thinking about stocks as the same with most others including me. Another way to look at...those that don't know you trade and when they talk about the market with you... I bet most are talking about stocks. Simply, we tend to navigate to what's thrown out there the most in front of us to see and hear...that is stocks. Also, another thing about the advertising...how many futures trading commercials you see on TV in comparison to stock trading commercials especially during the 90's??? Heck...I recently met a guy that asked me what I do for a living. I said I'm a market trader. He replied...what stocks you trade???. P.S. I trade futures. Mark
Interesting. I never traded stocks until I plunked down my $5k prop money. I always traded futures, never intraday, swing trades. What would be a good firm to trade futures intraday? Something that offers direct access fast execution like my Genesis Platform. Thanks
That is a big part of it. Also, like you said that 99% of traders on this forum are stock traders, not really true, but I think the reason may be because Stocks are more known to the general public, which is why 99% of people joining ET hoping to start trading, always start with stocks.
Futures are easier. I have not traded a stock in at least 6 months, maybe slightly longer. I have traded a boatload of futures in that time. I really like the massive liquidity and I also like that I can short just as easily as I can go long. Futures are way more advanced in my opinion. Then theres the leverage. A euro fx contract costs me about $2,000 per contract. On a slow day I can easily get about 10 points out of that per contract. At $12.50 a point thats about $120 after commisions. Thats 6% on my $2,000. This morning I took one trade, got stopped out at 23 points per contract. Thats 14% on each contract. What stocks move like that regularly? If you use very good risk management you can make a ton of money with futures. If your risk management sucks, you will lose a ton of money with futures. For me its just a personal choice and I don't have to do any indepth research, or know how to read balance sheets, or worry that even though all the analysts are rating it a buy its actually about to implode. Theres two main trades I use. If the day is trending you look for price failures and jump onto the trend. If the day is consolidating I use pivots and trade off the pivots. Can you get much simpler than that?