Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

mangolassi

Futures Vs. Stocks - Trying to Decide What to Learn for Day Trading

Recommended Posts

Hi all,

 

I am looking to start seriously paper day trading either stocks or futures (I have dabbled here and there). Now, my eventual goal is to learn and go live with whatever I am papertrading (whether it be stocks or futures). I have been reading technical analysis and trading psychology books, and have most recently been going through Al Brooks' books on price action trading.

 

I want something that I can be successful on at a lower timeframe (such as 5 minutes) for day trading, and something that follows the principles of price action in a reliable way.

 

I have some questions for those of you who have had experience with either stocks, futures, or both.

 

1) I have heard that the futures day trading market is for "professionals only". Is there any truth to this? When you compare futures to stocks, is any one market in particular more or less difficult for beginners to learn from?

 

2) I have just started trying out Lightspeed Trader, and so far I love the platform. Really efficient for day trading stocks. Is there any similar platform for futures day trading?

 

3) Can someone give me a quick overview of the difference in futures and stocks with regard to volatility? It seems people argue both sides - some say that futures are more volatile, some say that stocks are more volatile.

 

4) Do different futures have their own "personality"? Basically, how easy is it to take a strategy from CL for example, and apply it to ES or NQ? In stock trading, it seems that the stocks behave very similarly (with regard to technicals), and you can apply strategies broadly. Is it the same with futures, or is that more difficult?

 

Thanks in advance for any replies.

Edited by mangolassi

Share this post


Link to post
Share on other sites

message too short make it at least 20 characters

 

Hi all,

 

I am looking to start seriously paper day trading either stocks or futures (I have dabbled here and there). Now, my eventual goal is to learn and go live with whatever I am papertrading (whether it be stocks or futures). I have been reading technical analysis and trading psychology books, and have most recently been going through Al Brooks' books on price action trading.

 

I want something that I can be successful on at a lower timeframe (such as 5 minutes) for day trading, and something that follows the principles of price action in a reliable way.

 

I have some questions for those of you who have had experience with either stocks, futures, or both.

 

1) I have heard that the futures day trading market is for "professionals only". Is there any truth to this? When you compare futures to stocks, is any one market in particular more or less difficult for beginners to learn from? Trial them both... Which one is best depends on YOU. Your proclivities, inclinations, talents, feel, methods... You are a sample of one

 

2) I have just started trying out Lightspeed Trader, and so far I love the platform. Really efficient for day trading stocks. Is there any similar platform for futures day trading?

Trial the top three or four futures platforms... for the one that fits you.

 

3) Can someone give me a quick overview of the difference in futures and stocks with regard to volatility? It seems people argue both sides - some say that futures are more volatile, some say that stocks are more volatile. Instead of exploring differences in Volatility btwn... best to initially focus on differences in Leverage...

 

4) Do different futures have their own "personality"? Basically, how easy is it to take a strategy from CL for example, and apply it to ES or NQ? In stock trading, it seems that the stocks behave very similarly (with regard to technicals), and you can apply strategies broadly. Is it the same with futures, or is that more difficult? Different futures do have different 'personalities' but your own perceptual acuities or lack of them, the method, system being applied, etc. may dull / shroud those differences. Across time I learned I can make all futures "behave very similarly" by using different chart time frames for each one ... hth

 

Thanks in advance for any replies.

Share this post


Link to post
Share on other sites
Hi all,

 

I am looking to start seriously paper day trading either stocks or futures (I have dabbled here and there). Now, my eventual goal is to learn and go live with whatever I am papertrading (whether it be stocks or futures). I have been reading technical analysis and trading psychology books, and have most recently been going through Al Brooks' books on price action trading.

 

If you are studying Al Brooks, you may also want to explore Bob Volman. Both authors offer up good information concerning price action. Bob Volman is easier to read and understand (personal opinion).

 

If you learn to trade price action, you can trade anything...

 

Some stocks are more volatile than others, as some futures markets are more volatile than others. Exploring markets to find a proper fit for yourself will take some time, but I would focus my learning on trading the less volatile vehicles as a beginner.

 

Day trading stocks will require a much larger account balance (25K minimum, but you will need much more than that). Shorting stocks is more difficult than shorting futures. There is also a tax advantage with trading futures.

 

I've traded both... my preference is futures.

Share this post


Link to post
Share on other sites

Thanks for the help.

 

Are there any particular reasons why shorting stocks is more difficult?

 

Do you think the ES is too volatile to start observing/paper trading with? Since Al Brooks uses it primarily as an example in his price action books, I have been noting down my observations on the 5 min chart starting at 9:30 in the morning, just seeing how the thing behaves and moves. It seems like the perfect day trading market to get into, since it has amazing intraday trends, breakouts, etc. When I look at NQ or YM, it seems that these guys are really too slow for day trading. Haven't really looked into CL (yet).

 

Which brokers should I look into? I have been using NinjaTrader with a demo from AMP, and I like the NT platform.

 

If I eventually want to get into automated trading, are there some advantages/disadvantages to the various platforms?

 

Sorry for all the questions, and thanks for helping me out.

Share this post


Link to post
Share on other sites
Thanks for the help.

 

Are there any particular reasons why shorting stocks is more difficult?

 

Do you think the ES is too volatile to start observing/paper trading with? Since Al Brooks uses it primarily as an example in his price action books, I have been noting down my observations on the 5 min chart starting at 9:30 in the morning, just seeing how the thing behaves and moves. It seems like the perfect day trading market to get into, since it has amazing intraday trends, breakouts, etc. When I look at NQ or YM, it seems that these guys are really too slow for day trading. Haven't really looked into CL (yet).

 

Which brokers should I look into? I have been using NinjaTrader with a demo from AMP, and I like the NT platform.

 

If I eventually want to get into automated trading, are there some advantages/disadvantages to the various platforms?

 

Sorry for all the questions, and thanks for helping me out.

 

Read up on the requirements and mechanism of shorting stock... you'll understand.

 

Successful day traders make money on the YM or NQ. It may be that you just don't recognize the opportunities as yet.

 

Look into all brokers. You don't know enough yet to pick apart trading platforms... NT is fine.

 

Automated trading... don't know.

Share this post


Link to post
Share on other sites

I am a big fan of stocks so i would say stocks. I have seen traders make more money in stocks than in futures. This is my general observation and may vary for other people.

Share this post


Link to post
Share on other sites

So I opened up a Ninjatrader account this past week. Now I'm getting ready to fund it. I think in a couple of weeks I'll fund, and until then I'm just sim trading and documenting my progress on an excel spreadsheet.

 

When I go live, I think I'm going to start very small just to practice 1 contract on the ES. Do you guys think putting $6,000 is OK just to try and break even and practice? For ES, Ninjatrader requires $5060 initial, and $4600 maintenance.

 

At this point, I am more concerned with learning to manage my trades and not over-trade. I have been backtesting and sim trading two strategies that I worked out from Al Brooks' price action books, and so far it's been working out well on the indexes. With these strategies I am just trying to scalp 1 point from the market per trade during trends, and with 1 contract and the stop loss I typically place, my losses likely won't exceed $100 per any given day. For the first month or so, if I can enter trades that fit my strategies, and learn to manage my stop losses and profit targets, if I can just break even I'll be more than happy with that progress. Then I guess I can fund more money and work up to 2 contracts so that I can swing half of my position for more profits after scalping a point from the first half.

Share this post


Link to post
Share on other sites

At the risk of repeating ourselves, it's important to note that futures trading is not for everyone. You can invest in the futures market in a number of different ways, but before taking the plunge, you must be sure of the amount of risk you're willing to take. As a futures trader, you should have a solid understanding of how the market and contracts function. You'll also need to determine how much time, attention, and research you can dedicate to the investment.

 

As an investor, you can trade your own account without the aid or advice of a broker. This involves the most risk because you become responsible for managing funds, ordering trades, maintaining margins, acquiring research and coming up with your own analysis of how the market will move in relation to the commodity in which you've invested. It requires time and complete attention to the market.

 

Another way to participate in the market is by opening a managed account, similar to an equity account. Your broker would have the power to trade on your behalf, following conditions agreed upon when the account was opened. This method could lessen your financial risk because a professional would be making informed decisions on your behalf. However, you would still be responsible for any losses incurred as well as for margin calls. And you'd probably have to pay an extra management fee.

 

A third way to enter the market, and one that offers the smallest risk, is to join a commodity pool. Like a mutual fund, the commodity pool is a group of commodities which can be invested in. No one person has an individual account; funds are combined with others and traded as one. The profits and losses are directly proportionate to the amount of money invested. By entering a commodity pool, you also gain the opportunity to invest in diverse types of commodities. You are also not subject to margin calls. However, it is essential that the pool be managed by a skilled broker, because the risks of the futures market are still present in the commodity pool.

Share this post


Link to post
Share on other sites

Whether a trader decides to use stand-alone options, stock futures, or a combination of the two requires an assessment of individual expectations and investment goals.

 

One of the first questions an investor must ask is how much risk they are willing to take on in their investment strategies. Option trading provides less upfront risk for buyers given the lack of obligation to exercise the contract. This provides a more conservative approach, particularly if traders use a number of additional strategies like bull call and put spreads to improve the odds of trading success over the long term.

Share this post


Link to post
Share on other sites

There are some definite differences between trading stocks and tradingfutures. ... A company value is reflected in its stock price and commodity futures values are derived from the underlying price of the commodity: A stock is simply a partial ownership of a company. The value of the stock is reflected in its price.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • I am willing to share the subscription cost. Let me know if you are interested 
    • My guess is that the COT numbers are based on Tuesday figures. So a weekly chart wouldn't distinguish between the different numbers on Monday and Tuesday.
    • 4 months in and Marketsmith has done really NOTHING for me......still waiting for that stock that will make the year worth it and pay for the $1500 dollar price tag......the paper has become virtually useless......especially since I used it for Political mostly political reference with Issues and Insights.......the rest of the paper is mostly geared to Stock advisers.....not the regular guy........way to boring saying nothing but how to treat guys like me.........this could be my last year.
    • Date : 22nd July 2019. MACRO EVENTS & NEWS OF 22nd June 2019.No deal Brexit risks will continue to unsettle markets next week as the two candidates hardened their rhetoric in end stages of the party elections. The ECB however will stand out as the event of the week,with Brexit uncertainty an important part of the overall outlook. Have a look at the most important events of the coming days in our usual weekly publication. Tuesday – 23 July 2019   The announcement of the next Prime Minister of the UK – Event of the week – Original Brexit campaigner Boris Johnson remains the front runner in the race and is widely expected to be confirmed as the new Prime Minister next Tuesday. Housing Data (USD, GMT 14:00) – A steady rate is anticipated for existing home sales in June at the firm 5.340 mln pace seen in May. The median sales price is estimated to ease to $275,000, for a y/y gain of 0.4%, down from 4.8% in May. In Q1, we saw an average sales pace of 5.207 mln. In Q2, a better 5.297 mln pace is expected. Wednesday – 24 July 2019   Services and Manufacturing PMI (EUR, GMT 07:30) – Preliminary Composite PMIs for Eurozone and Germany are expected to fall in July, to 51.8 and 52.5 respectively, while the Manufacturing PMIs are forecasted at 48.0 and 45.4 respectively. Services and Manufacturing PMI (USD, GMT 13:45) – Preliminary Manufacturing and Services PMIs are expected to decline in July, to 50.4 from 50.6 and 51.0 from 51.5 respectively. Thursday – 25 July 2019   German IFO (EUR, GMT 08:00) – German IFO business confidence is expected to slip to 96.7, after it held steady the past 2 months around the 97 barrier. Event of the week – Interest rate Decision and Conference (EUR, GMT 11:45) –The ECB is meeting on July 25, – shortly after the confirmation of the new PM in London and ahead of the Fed, which is widely expected to cut rates again at the end of the month. On balance, markets see more merit in keeping official rates unchanged next week, while moving to an official easing bias and promising that rates will be at “current or lower” levels well into next year. ECB Monetary Policy Statement (EUR, GMT 12:30) -The July meeting will clearly be a “live” one with doves and hawks battling it out over when to deliver the now widely expected easing measures. It is expected that the majority will see more merit in keeping policy settings unchanged, but change the guidance to introduce a clear easing bias. Durable Goods (USD, GMT 12:30) – Durable goods orders are expected to rise 1.0% in June, after a -1.3% figure in May. Transportation orders should rise 2.7%. Boeing orders rose to only 9 from just zero in May, with weakness due to the hit from problems with the Boeing 737 Max that prompted buyers to delay new purchase commitments. Vehicle assemblies should ease to 11.1 mln from an 11.3 mln pace in May. Durable shipments are expected to rise 0.5%, and inventories should rise 0.6%. The I/S ratio is expected to hold steady at 1.67 since April. Friday – 26 July 2019   Gross Domestic Product (USD, GMT 12:30) – Gross Domestic Product is expected to grow 1.8% in Q2, with a sturdy 2.4% growth rate for final sales thanks to solid growth rates of 3.9% for personal consumption and 4.3% for government purchases, alongside a big $27 bln unwind of the Q1 inventory pop. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Andria Pichidi Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.