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Q: What are the advantages to trading futures instead of stocks or other instruments?
A: There are many very compelling reasons why most serious traders prefer to trade futures YM to stocks. Here are a few of those reasons. If you wish to know more information about a specific point, feel free to e-mail us.
Commissions are very reasonable $4/round turn trip on the YM at most brokers
Anyone can day trade without needing $25,000+ in the account! A lot of our users have modest accounts
Taxes are less complicated. Your not required list every sale on your tax return! (US)
Market liquidity Futures are always liquid enough. Market orders are instant. No strange fills do jumps
The spreads are never going to be huge like they can get on stocks, decreasing causing slippage
Focusing on one instrument day in and day out is less complicated and more productive Most everyone who is successful in the trading business started out by mastering one particular market. We'd rather be the master of one market then a jack of all trades. Each individual stock has it's own characteristics of price movement and it's character can change from day to day, making it either a good or bad choice to trade at any given time.
Freedom. You don't need to wake up 3 hours before the market opens to scan for stocks or opportunities to trade
Share size allocation is easier.
RISK: We've seen stocks that plunged 20 points due to random company event. While global economy reports move the futures from time to time, it's never as unpredictable as a single stock can be.
There are always shorts available and no up tick rule you must abide by
The $5/tick range of the YM e-mini futures contract makes for lower slippage
Bang for the buck. A futures trading making 1 - 3 trades a day and can make as much as multiple stock juggling traders.
Less stressful. Concentrating on one liquid market each day will improve your focus and allow you to work on your setups. Keeping track of 5 - 10 securities can be cumbersome.
Market direction. You don't have to follow systems that mirror the indices/ sectors, as eminis ARE the indices. Stock traders constantly have to follow the cues from the indices to track their positions. That means more eyes to follow all these charts.
Less investment in hardware and software cost. I used to have 3 PCs with 3 monitors, now only 1. Used for have 4 charting services, now 1, another as backup and it's free.
Very infrequent surprise gaps to deal with The futures markets are virtually always open. The e-minis trade 23 hours a day with a pause between 16:15 - 16:45 EDT. When terrorists attacked the London underground in the early hours of the morning, if you wanted to, you could get out in minutes and not have waited until the market opens to dump the stocks along with panicking crowd.
NO market makers playing games with the particular stock
NO routing decisions to make: " ECN? ARCA? REDBOOK????? Oh man, could have gotten a better fill with ARCA! " |
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Once I read this thread, I said to myself "I've heard these points before."
5th Q&A from the bottom. Almost verbatim.
FAQ: Puretick.com YM Emini Day trading Questions and Answers
PureTick.Com :: View topic - What are E-Mini Futures and Why are they better then stocks?
I think these are valid points but I get a little spooked when everybody starts to say the same thing, exactly.