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Stocks vs Index Futures?

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Stock trading seems to be more popular than the futures market. For a starting trader should one look to begin in the stock market? Why do most traders trade equities and not futures? If a trader can make 2-3 ES points a day consistently, all he needs to do is to increase size which will generate a decent income. With the leverage and liquidity offered in the index futures I would think this offers a better bang for the buck. Any thoughts on this?

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I think around here you'll find that most of us trade index futures or forex. I like index futures because they much more widely viewed than a single stock. Much more credence is given to the indices, and the futures are consistent in the patterns they put up for us to trade.

 

Just my 2 cents ;)

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Hello TinGull,

 

From my understanding there are no market makers in the futures market? Would this make it easier to trade without the market maker games? Also how do you follow the entire basket of stocks for lets say the S&P 500 emini's. Wouldnt this be too hard to follow?

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Right, as far as my understanding goes on the market maker deal. All I know is my fills are lightning fast, so if there is someone or something handling my order and taking the opposite side, then they are fast and I need them to clean my house like now! :) I trade the YM (mini dow) and no, I don't follow the whole basket. Futures are very technical in nature, and tend to follow rules of technical analysis as lots of the traders are speculative in nature, and the rest are hedging their positions in the cash equivelant.

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Stock trading seems to be more popular than the futures market. For a starting trader should one look to begin in the stock market? Why do most traders trade equities and not futures? If a trader can make 2-3 ES points a day consistently, all he needs to do is to increase size which will generate a decent income. With the leverage and liquidity offered in the index futures I would think this offers a better bang for the buck. Any thoughts on this?

 

Hi newtrader,

 

I'll throw in my opinion on on the subject. I trade Equities and Index Futures. First off what type of trading are you interested in? Intraday, swing, position? In my opinion Index futures are a bit harder to trade than stocks and day trading requires more skill and psychological framework than swing or position trading. Stocks certainly move slower in comparison to the emini's and they offer a new trader move room for mistakes. It is true that If a trader can make 2-3 ES points a day consistently, all he needs to do is to increase size which will generate a decent income. But the caveat is that you have to be on a level in which you take consistently 2-3 points away from from the markets:p Markets can look deceptively easy to trade in hindsight.

 

As far as profit and loss emini's do offer more bang for the buck, but also offer more bust for the buck as well. I would say that if you are gearing towards futures start out trading the NQ or YM. Those markets offer smoother action and aren't as erratic. It really all boils down to these few things:

 

A.) How much capital you have devoted to your trading business.

B.) Your Psychological and analytical(technical) skill levels.

C.) Your overall level of market experience.

 

If your levels are lower than higher on those three things, you could spend your time grinding your account to dust while you try and figure things out daytrading.

 

The key is desire, persistence and patience. Stick around here and you will find allot of people willing to help, that's for sure.:cool:

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Thank you for the tips and comments. I am looking to start with $50k risk capital but if I do decide to start with the emini futures, I willl look to trade 1 contract at a time.

 

MrPaul, as a new trader starting out in intraday trading should I start with stocks until I understand the basics of trading? My only problem is that I am not too comfortable with Level 2 and the manipulation behind it. I find the futures market alot more fair. Ill make sure to go through the forum thoroughly this week. It seems there is alot of good information here. Thanks again.

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Thank you for the tips and comments. I am looking to start with $50k risk capital but if I do decide to start with the emini futures, I willl look to trade 1 contract at a time.

 

MrPaul, as a new trader starting out in intraday trading should I start with stocks until I understand the basics of trading? My only problem is that I am not too comfortable with Level 2 and the manipulation behind it. I find the futures market alot more fair. Ill make sure to go through the forum thoroughly this week. It seems there is alot of good information here. Thanks again.

 

Yeah check out the videos section, and make sure to ask questions if you have em' that's the best way to learn:)

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Also, if you need a copy of Disciplined Trader and don't mind some torn corners (my dog decided to have a go at it), I've got a copy here I can mail in the United States for free. I'd rather have it go to a good home than me throw it out. The binding is torn a bit, but pages still hold together. Let me know!

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I used to daytrade stocks but after a while, I got burned from keeping up with so many charts, screens, scans, alerts, on top of that the indices. To keep my homework down to the minimum I decided to trade one emini and my trading is much calmer and easier and stressless (this should be the epitome of the trading environment, not the screaming, hooting and hollering). Trading 1 emini takes less from my daily life and still maintain the income I get as with stocks. So the decision was much easier.

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