Are stocks easier than futures/forex?
- Thread starter Xhale12
- Start date
In a word. Maybe.
Each individual is different, with different perceptions, different talents, and different risk tolerances.
Some people take to Forex, some to Stocks, some to Futures.
I would suggest you study each of them, decide what interests you, then paper trade it for a while to see how you do. Try each of them, and determine what your talents are, BEFORE putting any of your money on the line.
Some people take to Forex, some to Stocks, some to Futures.
I would suggest you study each of them, decide what interests you, then paper trade it for a while to see how you do. Try each of them, and determine what your talents are, BEFORE putting any of your money on the line.
BRO, so much easier! Almost everyone makes money in stocks.
The advantage of stocks is that the universe of instruments is much larger and more dynamic: there are always news releases, earnings, mergers, spikes and crashes, big gaps up or down etc. even on days when the typical widely-followed index futures are just chopping around. So, any given trading system applied to a wide universe of stocks will find a greater number of opportunities/trades over a given time period.
The disadvantages include: less favorable tax treatment, typically lower and variable liquidity, overnight risk, much higher margin requirements, less ability to familiarize yourself with the nuances and quirks of the instrument's movement, and finally the logistical/operational implications of having to scan, track, and execute on potentially thousands of symbols.
In other words, trading futures is operationally much simpler but requires far greater precision, patience, and discipline due to fiercer competition; edges in stocks are easier to come by, but to identify and exploit them successfully can require a significant amount of infrastructure and systems-design work.
Excellent question and something that I am going through as well. I have no answer, but just some points.
1. With stocks, you have to follow several at a time. The reason i say this is because your setups that you are looking for might not happen all day long. Some stocks are hot for a few days and then volume and volatility drop. Also, each stock might have its own character, so although price action or how ever you are trading should work for all instruments, I think being familiar with the ebb and flow of each individual instrument would help.
2. When you are consistent, scaling up with stocks might be harder as buying more volume might not be possible without more and more slippage. With futures, it sounds like this isn't an issue. Sure you don't want to be trading 100 contracts of the ES, but I doubt anyone does that. As an individual trader, in CL for example, each penny move in price is worth $10. So just one contract can make you hundreds of dollar a day.
3. On the flip side, buying a lot of 100 shares and looking for a move of 25 cents really limits your risks. With the futures, each tick is a fairly high value tick, anywhere from about $5 for the NQ to $12.50 for the ES. So for starting out, it seems like stocks would cost less in terms of education.
4. Most of the experienced guys are trading futures. Two ways to look at that. You are trying to take money away from people who know what they are doing.. hence harder, but you also can follow along the expert advice of these guys. Trading random shares might not get you as indepth help as trading a popular futures contract.
That's what I can come up with off the top of my head!
1. With stocks, you have to follow several at a time. The reason i say this is because your setups that you are looking for might not happen all day long. Some stocks are hot for a few days and then volume and volatility drop. Also, each stock might have its own character, so although price action or how ever you are trading should work for all instruments, I think being familiar with the ebb and flow of each individual instrument would help.
2. When you are consistent, scaling up with stocks might be harder as buying more volume might not be possible without more and more slippage. With futures, it sounds like this isn't an issue. Sure you don't want to be trading 100 contracts of the ES, but I doubt anyone does that. As an individual trader, in CL for example, each penny move in price is worth $10. So just one contract can make you hundreds of dollar a day.
3. On the flip side, buying a lot of 100 shares and looking for a move of 25 cents really limits your risks. With the futures, each tick is a fairly high value tick, anywhere from about $5 for the NQ to $12.50 for the ES. So for starting out, it seems like stocks would cost less in terms of education.
4. Most of the experienced guys are trading futures. Two ways to look at that. You are trying to take money away from people who know what they are doing.. hence harder, but you also can follow along the expert advice of these guys. Trading random shares might not get you as indepth help as trading a popular futures contract.
That's what I can come up with off the top of my head!
You mention forex in your title but you and others ignore forex in your posts.
Is there some fundamental disadvantage to forex trading?
futures and forex are leverage plays, high leverage.
such risks are a fast way to account blow up.
also in futures and forex, much more smart money is involved and these big sharks often join together and wipe out little guy's stops in a one go.
on the otherhand in stocks, fundamental information can be manipulated by crooks like in Enron and Worldcom cases.
such risks are a fast way to account blow up.
also in futures and forex, much more smart money is involved and these big sharks often join together and wipe out little guy's stops in a one go.
on the otherhand in stocks, fundamental information can be manipulated by crooks like in Enron and Worldcom cases.