Are there more risks with indices?

[murray t turtle]

As far as I understand the quirk with ETFs is: The issuing entity (authorized participant) might decide to go for a coffee break and ETFs could start substantially deviating from NAV. Doesn't happen in liquid ETFs under normal conditions but there have been concerns about ETF pricing during market stress. In such circumstances the only option might be to sit tight w/ limit exit to not get a ridiculous fill. Not something to worry about 99.99% of the time though.

With futures it's just a matter of liquidity in the general market and if there is a party willing to take the opposite of your trade. If you're small fry in a liquid futures contract (front month) then that's likely to not be an issue.

Equity index futures are generally 'safe' but remember leverage and margin...

...low vol is usually a reason FX traders use greater leverage, resulting in blow outs on the occasions when unusual vol actually happens.

Equity indices IMO have all the advantages: Good range most of the time, built in statistic long bias, easy to understand crowd psychology, etc. Of course, everyone will have to find what works for themselves.

%%
Excellant points, mr snusk;
the coffee break\ breakdown\crash has happened in semi liquid etfs like DYV. Good thing it looked like bad data to me/LOL. Years later/it still looks like bad data/LOL
Traded es........;
prefer/UPRO/spxs/spy/.......plenty liquid. But i still do some semi liquid stuff also;
strangely seems to be less panic selling/but nothing here is a prediction...............................................................................................

 

[outhoe]

relatively lower risk compare with forex.
why?
In general, forex doesn't move much compare with index futures.
ie most of the time, you can hardly achieve reward : risk ratio of > 2:1
Occasionally forex moves massively like what happened to GBP today.



Forex was excellent for trading 1 decade ago

Then on most days when forex moves a snail's pace it shouldn't be very risky to trade. If one just avoids news trading or when important things are happening in the world, it should be all right.

 

[outhoe]

Two things make your question unanswerable.
•"Risk" has half-a-dozen meanings, from a vague uncertainty to a monetized sum.
• Even getting to a monetized sum, you need a specific instrument (or family of instruments) and its associated multiplier. And if you're intending on sub-hour holds, you need the tic size, as well.

There is no risk in an index -- the risk is in the trade you are considering.

What I implied was the risk involved in trading as such.

 

[outhoe]

As far as I understand the quirk with ETFs is: The issuing entity (authorized participant) might decide to go for a coffee break and ETFs could start substantially deviating from NAV. Doesn't happen in liquid ETFs under normal conditions but there have been concerns about ETF pricing during market stress. In such circumstances the only option might be to sit tight w/ limit exit to not get a ridiculous fill. Not something to worry about 99.99% of the time though.

With futures it's just a matter of liquidity in the general market and if there is a party willing to take the opposite of your trade. If you're small fry in a liquid futures contract (front month) then that's likely to not be an issue.

Equity index futures are generally 'safe' but remember leverage and margin...



...low vol is usually a reason FX traders use greater leverage, resulting in blow outs on the occasions when unusual vol actually happens.

Equity indices IMO have all the advantages: Good range most of the time, built in statistic long bias, easy to understand crowd psychology, etc. Of course, everyone will have to find what works for themselves.

Thanks for the explanation. I am a small fry not playing big for long, and that too dependent on if my small money pays off something, just exploring options.