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Old 02-09-2007, 11:29 PM
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Re: Why traders prefer equities over futures?

I like most, started out in stocks and have moved completely to futures.

Why? Futures are just all around cleaner. They are built for trading. Day trading stocks is like trying to race in cars built for touring. Futures are built for speed.

The only advantage with stocks is that when the overall market is dead in the water there are alway several stocks that are running through the roof or the floor. The problem is finding those stocks before they make their move or as the move is beginning. That's the hard part.

The drawback with futures is the flip side. When the market is going nowhere there's nowhere to go. Unless you want to try oil or Euros. But what's your edge there?

Except for that, futures are better all the way across the board, e.g.:

1) High liquidity.

2) Better margin.

3) Fairer and cleaner fills.

4) No market makers. First come, first served in the e-minis.

5) Easier execution. Either buy or sell. No complicating "sell short" or "buy to cover" commands. Buy 1, then sell 2, and viola! you are short 1.

6) Easier to place limit orders as targets and stops on shorts. Many brokers will not allow you to enter more than one "buy to cover" order for the same shares of stocks. Thus you cannot place both a standing target and stop order for the same shares. Just makes things harder and they are hard enough.

7) No uptick rule on shorts. I once got filled 30 cents lower than my desired price on a market order short on a day traded stock. Needless to say that trade was a loser.

8) Lower commissions.

9) Lower tax rates. 60/40 longterm/shorterm taxation rule on futures.

10) Easier tax prepartion. A 1099 at the end of the year. No need to log all your trades for the IRS.

What did I leave out?

The catch? You trade against the best and they know what they are doing.

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