Futures vs Equity Trading
- Thread starter NJ1000
- Start date
Take this from an (so far) unsuccessful trader...
A thorough morning preparation is key to avoiding "surprises" as surprises (movements other than what the unprepared trader expects) cause emotions to reach elevated levels... Next strong money management and limited trading in the direction of a higher time frame are key.. The less you trade the less you will lose as there are not THAT many setups each day.. all depending on the type of trader you plan to be.
A thorough morning preparation is key to avoiding "surprises" as surprises (movements other than what the unprepared trader expects) cause emotions to reach elevated levels... Next strong money management and limited trading in the direction of a higher time frame are key.. The less you trade the less you will lose as there are not THAT many setups each day.. all depending on the type of trader you plan to be.
I'm currently easing my way into trading ES from strictly trading equities. I spent the past 4 months or so mostly trading in my demo account and then putting on limited live trades in between. Testing strategies and stop management over and over in sim has been incredibly helpful for me.
What's been most helpful to me is knowing a) what the trend is, b) where the support and resistance levels are, and c) where in the trend price is now, in 3 time frames: 5-min intraday, 2-week hourly, and 3-month daily
This helps keep you from scratching your head in confusion when price seems to "irrationally" move against you. For example, price may have fallen intraday significantly to the downside, say 6 pts, and you go long as it seems to find buyers there (because we are technically in an uptrend). Suddenly continues to sell off hard another 6 pts, stopping you out at a loss before reversing and eventually testing the earlier high of the day. If you checked the 2-week hourly chart, you would've seen that previous support was in the 1086.00 zone, and you went long at 1092.00 after the initial selloff instead of waiting for the very common 2nd leg of a move.
S/R levels and trend lines hold up very well in the absence of truly market-moving news. You can use them in longer time frame to guide higher probability trades in shorter time frames.
The same can be said for futures. It is not as easy as it used to be. I made a post on this a while back that explains the current market environment.
http://marketowl.blogspot.com/2009/12/less-dumb-money.html
I agree, having traded both for a number of years. If you are making money in equities, stay there. If you aren't, trading index futures is not going to help you become instantly profitable.
You'll find that the leverage cuts both ways, and if you have bad habits in trading equities they will likely be exagerated with futures contracts.
In terms of overall movement, strategies, etc., they are very different animals.
Good luck.
I have been trading both, plus forex, for years. I started with futures and I added equities and forex after a few years. My experience is summarized below and it is of course my personal experience:
Futures - for intraday/swing trading. Main and only tool that works: price action
Equties: - for position/trend trading. Main tool: Indicators and also fundamentals is a must, cannot trade without them.
Forex: - Intraday/swing/trend trading. Tools: anything you can think of, including the news.
IMO
(1) Equity intraday trading is not profitable in the medium/longer term due to commissions
(2) Futures trading success relies heavily on efficient executions plus on the understanding of price action that comes mainly with experience but also though the use of very advanced tools (NNs, data mining, GP, etc.).
(3) Equity trading offers capability of diversification and identification of opportunities from a larger universe through proper scanning. Futures trading demands concentration and specialization. Two opposite areas.
+1
Nodoji is years away from providing you any helpful input.
Seriously.
I've only done very limited live trading of ES and haven't traded much over the holidays because I'm not too crazy about this range bound action.
I've found two strategies that work very well and by focusing on one or two trades a day, I took some nice chunks out of the market a few weeks ago when ES actually moved more than 5 pts in a day.
I believe that patience in waiting for only the best setups is key to success. Maybe only one solid trade comes up in a day; maybe a couple. But those are the days that let you take some meat out of a move instead of chopping to death with scratch trades which is what I would've done on a day like today had I traded.