Failed futures traders switching to equities

[d08]

Quote from krazykarl:

You must be new here.

Unless you have a postcount > 1000 your noise-hole is not welcomed. Just sit back, interject intelligent questions where appropriate and learn from others mistakes.

I'm not new here. I usually don't make it to posts with any real content since there is so much crap to sift through. Postcount >1000 means either you have a lot of insight into trading related subjects or you you like making useless posts and don't really trade, for 80% here its the latter.

 

[ivanbaj]

Nice post! I trade only futures, it is nice to hear from someone with experience on both sides.

Quote from NazSpaz:

With how this thread has devolved into a fight between futures vs stock guys, I fear stepping into it. Always interesting how some guys are so entrenched in one or the other and hate the guys who tout the other. Stock guys vs futures guys is worse than Repubs vs Dems, almost more of like how those English soccer fans have such hatred for other teams' fans.

So having said that, I want to try and give some insight to the original poster BASED PURELY ON MY PERSONAL EXPERIENCES, so please don't flame this, it is one man's journey.

I have tried both stocks and futures. There was a quote earlier where someone said futures are like a jungle and stocks are like finding hidden money in the corner. From my experience that is very true. I know some futures guys that do make money. The guys I know that make money do take pretty large P&L swings from time to time, swings I myself would be very uncomfortable with, but they are large traders with big accounts. I tried futures as well, I would make a bit - make a bit - make a bit - then wham, one move would rip me a new one. I made money on it overall, but not near enough as I would need and not as much as stocks make for me.

Stocks on the other hand are for me much more predictable. From my experience and connections in the business there I have seen a much higher success rate and P&Ls with stock guys than futures guys. I know there are guys killing it in futures, just saying I have seen many more guys fail trading futures than I have seen who trade stocks.

To the guy earlier that said stocks lead the futures, this is totally incorrect. All the big stock traders watch the S&P E-mini's like a hawk, and base our decisions around where it is going. In the real world there is no question that futures lead cash, not the other way around.

Which brings us to edge, if you are trading the leader (futures), you have to be a very good trader as you have to be right. If you trade the follower (stocks), you have an edge which is a few seconds of knowing which way the stocks should go before they do. You do not have to right near as often, thus the edge and higher success rate I have seen.

There are many more factors at play, but to any traders that ask me which they should trade I say stocks - albeit with one caveat: Prop.

Two of the big advantages futures offer are leverage and simpler tax accounting. If you do your daytrading retail, yes you have the PDT rule and a nightmare of accounting to deal with. If you get a Series 7 and head to a registered prop firm for stocks, you get leverage much better than futures offer (depending on your deal) and very simple accounting - one simplified P&L on a single page K1 statement at year's end.

Every now and then I don't doubt I will dabble with futures here and there just because I am a trading addict, but for the bread and butter that pays the bills I could not imagine doing anything but stocks for that.

 

[BoyBrutus]

Quote from IronFist:

i thought more people went from equities to futures.

disadvantages of futures:
-you're forced to use a certain leverage (eg. the lowest amount an ES tick can be is $12.50.)

advantages of futures:
-easier to do taxes
-no pdt rule
-preferential tax treatment
-no wash sales

So many advantages, why?

Herded like lambs to the slaughter

 

[NazSpaz]

Quote from lindq:

Your post was thoughtful and well written, but left out one very important point to this discussion: Timeframe.

A daytrader, working only in that environment, may find stocks easier to trade, IF they know what they're doing.

But in my considerable experience with both stocks and index futures, a trader holding longer than intraday will find futures the better vehicle. Among other advantages, the most important is that stops and targets will be active overnight, avoiding the morning gaps that often cause havoc with even the best planned stock trades.

I successfully traded equities for years, but eventually had my fill of stocks like DRL, THC, HAL, etc., that welcomed me in the morning with 10%+ losses because of criminal activity or just plain stupidity of the part of the managers. And if I've learned anything over the past few years, it's that NO management of any company is to be trusted again with my funds.

Very true, I do everything in my power to end every day flat, I am a pure daytrader. There are times that things do not go as planned and I take home some positions, in that case I try to hedge with SPYs but that is nothing more than a dirty bandaid really.

For me, I equate taking home stock positions as gambling (please, no flames from the millions of you that are about to say you make a ton doing that). That is a nice part about futures that you can have stops working all night, that clearly helps manage risk. I am all about playing the intraday odds - pure daytrading if you will - and taking what the market gives me, just try to capture my piece every day.

 

[BoyBrutus]

Quote from NazSpaz:

That is a nice part about futures that you can have stops working all night, that clearly helps manage risk.

Nice spin, I often view globex moves as stop hunts

 

[BoyBrutus]

Quote from lindq:



I successfully traded equities for years, but eventually had my fill of stocks like DRL, THC, HAL, etc., that welcomed me in the morning with 10%+ losses because of criminal activity or just plain stupidity of the part of the managers.

I successfully traded equities for years that welcomed me in the morning with 10%+ gains because of criminal activity or just plain stupidity of the part of the managers. Most often with technical analysis my positions were in the right direction before the breaking of news. This must be a new and unusual concept.

 

[xxxskier]

Quote from NazSpaz:

With how this thread has devolved into a fight between futures vs stock guys, I fear stepping into it. Always interesting how some guys are so entrenched in one or the other and hate the guys who tout the other. Stock guys vs futures guys is worse than Repubs vs Dems, almost more of like how those English soccer fans have such hatred for other teams' fans.

So having said that, I want to try and give some insight to the original poster BASED PURELY ON MY PERSONAL EXPERIENCES, so please don't flame this, it is one man's journey.

I have tried both stocks and futures. There was a quote earlier where someone said futures are like a jungle and stocks are like finding hidden money in the corner. From my experience that is very true. I know some futures guys that do make money. The guys I know that make money do take pretty large P&L swings from time to time, swings I myself would be very uncomfortable with, but they are large traders with big accounts. I tried futures as well, I would make a bit - make a bit - make a bit - then wham, one move would rip me a new one. I made money on it overall, but not near enough as I would need and not as much as stocks make for me.

Stocks on the other hand are for me much more predictable. From my experience and connections in the business there I have seen a much higher success rate and P&Ls with stock guys than futures guys. I know there are guys killing it in futures, just saying I have seen many more guys fail trading futures than I have seen who trade stocks.

To the guy earlier that said stocks lead the futures, this is totally incorrect. All the big stock traders watch the S&P E-mini's like a hawk, and base our decisions around where it is going. In the real world there is no question that futures lead cash, not the other way around.

Which brings us to edge, if you are trading the leader (futures), you have to be a very good trader as you have to be right. If you trade the follower (stocks), you have an edge which is a few seconds of knowing which way the stocks should go before they do. You do not have to right near as often, thus the edge and higher success rate I have seen.

There are many more factors at play, but to any traders that ask me which they should trade I say stocks - albeit with one caveat: Prop.

Two of the big advantages futures offer are leverage and simpler tax accounting. If you do your daytrading retail, yes you have the PDT rule and a nightmare of accounting to deal with. If you get a Series 7 and head to a registered prop firm for stocks, you get leverage much better than futures offer (depending on your deal) and very simple accounting - one simplified P&L on a single page K1 statement at year's end.

Every now and then I don't doubt I will dabble with futures here and there just because I am a trading addict, but for the bread and butter that pays the bills I could not imagine doing anything but stocks for that.

agree 100% NazSpaz.

btw, that was me who said trading futures is a jungle whereas trading stocks is like finding hidden money in the corner.

i think profitble traders, no matter what the instrument or timeframe, have found the right vehicle that matches their personality and capitalization (risk mgmnt). for me, it's futures. i play stocks mostly for the long-term now, and i much prefer ES as my daytrading vehicle.

 

[GCSICLRBC]

Quote from BoyBrutus:

Nice spin, I often view globex moves as stop hunts

That's because real market players give no respect to your MA's, stoch, fibo-snatchy, wave theory or any other junk on your chart.

I *rarely* get faded on ES. If I'm stopped it usually goes well against me & I"m grateful I only risked 2-4 points / contract.

I see stop hunting A LOT in the grains, especially soybeans. Yeah, it trades GLOBEX< so I guess you have a point. Point taken.

 

[BoyBrutus]

Quote from GCSICLRBC:

That's because real market players give no respect to your MA's, stoch, fibo-snatchy, wave theory or any other junk on your chart.

I *rarely* get faded on ES. If I'm stopped it usually goes well against me & I"m grateful I only risked 2-4 points / contract.

I see stop hunting A LOT in the grains, especially soybeans. Yeah, it trades GLOBEX< so I guess you have a point. Point taken.

No you got it the wrong way around. I fade my globex entries where retail most often place their stops.

I'm PA to bro

 

[MandelbrotSet]

Quote from GCSICLRBC:

That's because real market players give no respect to your MA's, stoch, fibo-snatchy, wave theory or any other junk on your chart.

I *rarely* get faded on ES. If I'm stopped it usually goes well against me & I"m grateful I only risked 2-4 points / contract.

Now that's a quote from someone who actually trades.

I hope you people who are saying "it can't be done" are taking notes ... eventually you will figure-out why what he is saying is true (give it five years ...).