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Why trading Futures vs ... and an introduction
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Why trading Futures vs ... and an introduction

  #1 (permalink)
Elite Member
Chiang Mai, Thailand
 
Futures Experience: Beginner
Platform: IB
Favorite Futures: N.A.
 
Posts: 2 since Sep 2011
Thanks: 2 given, 0 received

Why trading Futures vs ... and an introduction

Hi,

I have been on / off trading for the past 20 years, mainly stocks. Few years ago i blew an account trying to trade derivatives of stocks and CFDs, then went back to stocks where it has been more profitable. Looking to daily trade I have found a lot of resources and see most of platforms being futures oriented. Many years ago I was reading a lot of information from BMT and just get back again to the same source. That is why i am asking here:

Why do you prefer trading Futures vs other stocks or options ?

Which one would you recommend to start with and why ? I see a lot of resources based on S&P500 e-mini i think..

Optionally, what broker would you recommend for non US resident ?

Regards ,
Stephane

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  #2 (permalink)
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  #3 (permalink)
Market Wizard
London UK
 
Futures Experience: Beginner
Platform: CQG
Favorite Futures: Futures
 
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sbusso View Post
Hi,

I have been on / off trading for the past 20 years, mainly stocks. Few years ago i blew an account trying to trade derivatives of stocks and CFDs, then went back to stocks where it has been more profitable. Looking to daily trade I have found a lot of resources and see most of platforms being futures oriented. Many years ago I was reading a lot of information from BMT and just get back again to the same source. That is why i am asking here:

Why do you prefer trading Futures vs other stocks or options ?

Which one would you recommend to start with and why ? I see a lot of resources based on S&P500 e-mini i think..

Optionally, what broker would you recommend for non US resident ?

Regards ,
Stephane

Hi Stephane - I will give you my take of why futures and not stocks. For me futures are a more transparent type of securities. Your orders go through a system called Direct Market Access which means you don't have to go through intermediaries. You place orders straight on the exchange. The other thing is, the spread on most futures instrument is really tight. The most popular instrument have only a 1 tick spread, which means it takes only 1 price movement in your direction to exit the trade at break even.

As for recommendation on what to start, sorry I can't help - I believe it's a matter of personal taste, risk tolerance, how patient one is, what commissions they pay... there's different factors. The ES (S&P500 e-mini) is among the most liquid markets but it can be slow. On the other hand it's more suited to people who don't want a market that is too volatile.
There are volatile markets such as CL (Crude Oil) or GC (Gold) where one can make (or lose) money quickly. They tend to be far riskier because of the speed at which price can suddenly change.

So again a matter of individual preference.


Last edited by xplorer; November 3rd, 2017 at 12:29 PM.
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  #4 (permalink)
Membership Temporarily Revoked
Bel Air, Maryland
 
Futures Experience: Master
Platform: Thinkorswim
Favorite Futures: Currency
 
Posts: 22 since Jul 2017
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I find that Futures are more predictable. When backtested, up days were followed by up days 52% vs 48%- 200,000+ data points. Strong currency exchange in short period of time may lead to a good learning curve.

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  #5 (permalink)
 Vendor: www.orderflowdashpro.com 
North Carolina
 
Futures Experience: Beginner
Platform: NinjaTrader, Tradestation
Favorite Futures: es
 
Posts: 365 since Nov 2011
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Most traders choose futures because of:

* PDT rule in stocks. You need 25k to day trade stocks. You need to be with a prop firm/special training, I think.
* Better for technical traders. Most futures traders are technical or price based. Stocks have more "externalities"
* Leverage. You need leverage to trade or make outsize returns in markets.
* Like the idea of trading global macro concepts
* Options are very technical and difficult to grasp.
* Can start with a small amount but the low granularity (large notional values) makes it more difficult to grow an account
* Work well for system trading but the costs tend to be high if you get it wrong
* More professional traders. There are not many verified professional currency traders compared to futures traders. As for stock traders, I think most work at firms.

In terms of CFD, with futures you are getting access to the primary market. So, you're on a more competitive playing field. However, the CFDs are good for non US traders who have smaller accounts and/or want to swing trade. The combination could be useful- swing trading the CFD and day trading the future. As for the benefits of stocks, the main benefit is that there are more to choose from and it is easier to find stocks that are being driven by various factors whereas with global markets, the factors are not as easy to identify. Of course, futures are also super liquid and you can scale a strategy which is another benefit.

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  #6 (permalink)
Keab
London UK
 
Futures Experience: Intermediate
Platform: TT/Invesotr Rt/DTN.IQ
Broker/Data: LCT/Iq Feed
Favorite Futures: Dax/Bund/Dow/US 10 yr futures
 
Posts: 285 since Jul 2013
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sbusso View Post
Hi,

I have been on / off trading for the past 20 years, mainly stocks. Few years ago i blew an account trying to trade derivatives of stocks and CFDs, then went back to stocks where it has been more profitable. Looking to daily trade I have found a lot of resources and see most of platforms being futures oriented. Many years ago I was reading a lot of information from BMT and just get back again to the same source. That is why i am asking here:

Why do you prefer trading Futures vs other stocks or options ?

Which one would you recommend to start with and why ? I see a lot of resources based on S&P500 e-mini i think..

Optionally, what broker would you recommend for non US resident ?

Regards ,
Stephane

Hey there,
Do you mean you day trade/enter short terms trades intraday?
The reason why people prefer futures is that you can see order flow/volume going in and out of the market which gives a better idea of how the market will move rather than looking at a naked chart.

You could still trade options on shares based on that info, my experience of options is that they are quite expensive in terms of commission but I am not an expert.
But shares/indices are the way to go because of this https://www.youtube.com/watch?v=xJhvSeuYtEY

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  #7 (permalink)
Elite Member
Chiang Mai, Thailand
 
Futures Experience: Beginner
Platform: IB
Favorite Futures: N.A.
 
Posts: 2 since Sep 2011
Thanks: 2 given, 0 received

Thanks for your answers.

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