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I traded stocks 20 years ago. Day traded that is. Would I day trade them now? Not a chance. Would I buy as an investment? Yes, if I wanted to hold for a long time.
Downside of stock trading? Tax reporting and tax rate. Wash sales etc. etc.
Futures are great! The 60/40 rule is super for futures trading tax reporting and very simple at that.
What a simple vehicle for making money. Since we all just want to make money, what do you need? Movement! (or time decay if trading options).
For instance, on Friday the 26th, one 5 minute candle around 10am EST, provided 90 points =/-. One MNQ contract would yield $180.00. Let's see: $100.00 of margin.
You won't make that kind of money with stocks with a small account.
That's why futures are a boon. What my wife and I love about futures is not the complexity but the SIMPLICITY!
Pick the NQ or MNQ and trade nothing else. Fast moving enough to force one to learn price action. You don't have to have scanners. You don't have to look at stock after stock.
Summary: Futures trading provides all the movement necessary to make good money with the best tax rate (USA) and is the simplest way in the trading world to move forward developing your own career . If you want to lower risk and take longer positions such as 1 or 2 or 8 hours, then open a NADEX account and put on the same trades with defined risk.
Best regards over there in Italy! Hope the small business owners who cater to the tourists are not getting crushed!
Ps. We found Ross C. to be good entertainment. Who doesn't like to see someone make a bunch of money? And he has a good positive attitude.
I never thought about the tax issue, here in Europe futures and stocks are taxed exactly the same (20% to 30% depending on the country). After reading your post, now I feel happy that I am trading futures. You are absolutely right about NQ, it moves to much that it always offer good opportunities during the day. I am not good with high volatility situations, so I just let it calm down and enter later in the day.
Concerning Italy, the situation is not good... 30+ years of bad politics and now a pandemic, I can see so many business shutting down. I am not even in a touristic area, I think in touristic places it will be even more evident...our only hope is Mario Draghi, let's see.
It's disheartening about the tourist industry around the world and other businesses that have been bludgeoned. It's not only sickening but makes me angry how politicians have ruined so many lives by their overreacting decisions!
I checked out your town. Looks like a beautiful place. I have a soft spot for Italy. We love the pastoral way of life that still carries on there. We especially loved watching "Two Greedy Italians" with Antonio and Genarro. We hope to get there before too many years pass. I would like to visit Castelfidardo. Home to all those great accordion factories. I have been playing a Morbidoni brothers accordion for decades and would love to visit some of the top instrument factories there. After, we would take the ferry over from Ancona to Croatia then to Slovenia and Austria.
Yes, the 60/40 rule is great. First 60% of gain is taxed at the lowest capital gains rate and the 40% at the regular rate. Plus the reporting of trades is ultra simple vs. reporting stock trades.
As far as volatility, we wait for the first 2-5 minutes of the New York session to pass then look for opportunities. Yes it is volatile. For me, I just go to a smaller time frame like 2 minutes or less and look for price to be out of bounds. I eventually found that volatility can be your friend if you don't fear it. But, it's taken a few years to be able to understand that movement. That's why we stay with just the one indices.
Wishing you much success!
Ps. here is my favorite contemporary Italian accordionist. Pasquale Coviello. He is a master.
I put down 75% futures and 25% Stock. My only trading account is stocks and I actually do well on it. Have been doing that since 2014. Not the greatest but good enough where I can kinda go on a little bit auto pilot. I do the IBD method. But majority of my time is spent on studying futures trading. Like close to 90%. Still on a demo account after 3 years of studying. Feel like I am getting closer to my goal. I am still not profitable on a demo so I know I have work to do.
3 years on a demo account ? Don't you think you should dabble with a live small account with proper risk management ? 10 years on a demo account won't improve your chances of success. Give yourself a deadline on your demo account. if you still don't feel confident after that date then maybe futures are not for you.
In addition to the points raised by @redbarntrades (some of which are only relevant to US residents, but not all), here are a few more (based on US exchanges):
1. The Pattern Day Trader Rule. Basically, you are going to need to keep at least $25,000 in a margin account if you trade in and out during the day, subject to a lot of rules and definitions. Follow this link for details: https://www.investopedia.com/terms/p/patterndaytrader.asp
2. If you are not trading on margin (which has a different meaning in stocks), stock trades (on US exchanges) settle in two business days -- meaning, that's when you get the proceeds from a sale. Unlike futures, where the funds for a closed position are immediately available, you don't have access to the funds from a sale until trade date + 2. So if you trade often you will have funds tied up within the settlement process and unavailable to you for withdrawal or more trades until settlement. Obviously, if you intend to trade actively, your account has to be bigger so you can always keep some uncommitted funds for new trades, while waiting for old trades to settle. https://www.investopedia.com/terms/s/settlementdate.asp.
3. As you put it, "when something looks easy, it normally means that I am so naive that I cannot even see where the difficulty is hidden." Or, to put it another way, it's still trading. It's as hard or as easy as trading ever is....
There are other complexities, but these are enough. You can make money in stocks of course, but every market is different and has its own characteristics. I wouldn't call any "easy."
Bob.
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Edit: these are mostly procedural issues, except of course #3, which is the most important: it's still trading.
It's been so long since I traded stocks, I had to look up some of this and found that things had changed (or that I had mis-remembered ), but I think that I got the procedural details mostly right. (If not, someone may point out what I didn't.) The point of bringing all that stuff up is that it's a different marketplace with its own rules, some of which are not as convenient to the small or average retail trader. Plus, it's still trading.
When one door closes, another opens.
-- Cervantes, Don Quixote
Thanks for pointing the PDT rule out. I failed to mention that. I had not traded from stocks from 2001 to 2014. Started again when gold mining stocks took off. Then, we discovered the new trading rules that had changed such as the PDT limitations. That's when we started looking for alternatives.
My wife and I moved to Forex. Then to Nadex. Then to Futures. We've stayed with Futures. However, when we have the huge sell off days, I will open Nadex and look for out of the money longs. Sometimes, find a spread to trade. One trade a couple of years ago had a 6 dollar max. risk. The Dow was down about 1500 points if I remember correctly. I closed the position about 1 hour later for 96 dollar profit. Of course in retrospect, I certainly could have bought at least 5 contracts. Probably the best trade that I have ever made.
Forex: No central exchange
Nadex: Good for longer trades such as 20 minute through weekly.
But with trading futures, precise entries and any trade length fit our personal methodology better. Since most of my trades last 1-3 minutes, futures was a perfect fit. Plus, there is not the burden of accounting when one might do 20 to 100 trades a day.
Or, to put it another way, it's still trading. It's as hard or as easy as trading ever is....