Quote from Mike805:
Seeing as this thread is presenting some misleading and biased information, let me state some facts about the use of margin and the capital requirements of trading futures versus stocks.
While I hope people do their own research and come to their own conclusions rather than trust information posted by certain people here, I will say that my views are justified in that I can support my conclusions through experience and SIMPLE math.
Lets go through a simple cost/benefit analysis between attempting a trade in a future and a stock equity. I chose the EMDH6 contract and AAPL simply because I trade these products every day and they suit the purposes as well as any equity or future.
Lets say as a rough estimate (these are not formulaic calculations of daily range, they are my best guesses) that AAPL has a daily range of 1.50 and the EMDH6 is around 7 points. Suppose I wish to capture half the daily range (non-trend day) for each product, how much will this endeavor actually cost me?
Before I go through the math, let me first say that ALL markets trade in the same manner. Price action represents supply demand imbalances and good trading in one market will easily transfer into another. Contrary to what you may have been lead to believe by the OP, ease of entry/exit and the spread are what distinguishes one product from another (in this sense, a future is at a significant advantage due to the ease of shorting), not the perceived "difficulty" of one product over another. Trading effectively has very little (<5%) to do with the product you chose to trade - I'll ask anyone to argue this point - please provide an example of an "easy" vehicle versus a difficult one.
Anyway, back to the point:
1 EMDH6 contract costs me $2800 in maintenance, $3500 in initial and $700 in spread capital to trade for a total of 7k in "opportunity" equity. If I trade well, I'll possibly capture 3.5 points (1/2 the range) for a $350 gain minus the 4.80 I pay in commissions.
What would it require for a similar gain in AAPL? Well, first I need to take .75 out of AAPL which equates to ~500 shares. Today AAPL traded at ~72 calling for 36k in equity. The equity trade will cost me about the same as the future in commissions (.004/share +/- ECN).
The equity has a 5x opportunity cost to position myself and I cannot sell arbitrarily.
What is the point of all this? Well, nothing substantial other than the fact that 7k applied to the better priced market and, traded skillfully, will produce a much better (lower) opportunity cost to reward ratio.
Quality volume and price movement are found everywhere. Trading good opportunities with a solid plan is the crux of this business. The market you chose to trade, while important in cost/benefit terms, does not have an inherent trading ease or difficulty in terms of price movement.
