Intraday Stock Trading vs Equity Index Futures Trading

[REDP1800]

Yes we all understand the leverage in futures trading. We understand there is no downtick rule in futures, we know about the tax implications of futures trading and we know about the single exchange (CME) for trading emini sp500, e mini naz, and mini dow and mini russell 2000. We have heard taht tradign futures is cheaper, but now a days not by much. there is roughly 167 billion in public fcm money in futures fcm in the usa. This does not count direct clearing customers etc. or otc or any otehr related mkts just cftc recent data. There are about 3-4 million contracts traded in the equity futures per day.

Stocks we understand there is about 20 trillion dollars in us stocks dwarfing futures. we know there are multiple exchanges, we understand shorting can be hard to find shares, we know stocks are volatile and can have lots news events.

This thread is more about people who have traded both. what they saw from a trading perspective and if they tended to profit in one over the other and why.

I personally trade futures but a friend of mine said futures were deadly to him and stocks have always been good to him. He said the main reason was the extreme flexibility to position size in and out of stock trades versus futures which were huge trades and getting in an out of futures with different sizes was deadly when wrong due to the extreme leverage and size of the contacts.

I have been successful and unsuccessful with futures so I am not as consistent as I would like of course. I wonder if my ability to hodl overnight in stocks as well as getting in at 50 or 100 share lots instead of 500 (minimum spy qty based on a 1 lot emini) would allow me to get a feel for the market before going in large. I am not saying a 1 lot in futures is large but in stocks 500 shares is a good chunk of the spy.. thats roughly 140,000 dollar trade.

any truthful thoughts or expeeriences would be great

 

[soulfire]

I find intraday futures trading superior to stocks for the following reasons:

1) Much better tax treatment- You can claim a portion of your futures profits under long term capital gains compared to 100% short term gains via stock daytrading.

2) Much easier tax filing- you have just one form to file per futures contact type on net P/L versus each and every stock transaction and keeping track of wash sales.

3) Futures provide nearly 24 hours of continuous chart data versus the typical 6.5 hours of stock intraday data. It makes a world of difference when doing intraday chart analysis and interpreting all support and resistance levels.

I personally trade futures but a friend of mine said futures were deadly to him and stocks have always been good to him. He said the main reason was the extreme flexibility to position size in and out of stock trades versus futures which were huge trades and getting in an out of futures with different sizes was deadly when wrong due to the extreme leverage and size of the contacts.

The bottom line is determining the correct entry and exit areas. Scaling into a position can mitigate losses if your entry determination is a bit off but it won't save you if it's way off or you're trading in the wrong direction. As for exiting, you should have your exit zone if wrong also determined BEFORE entering the trade, so I don't see how it can be "deadly" unless one is just winging it with no STOPs or exits already mapped out. That would be just bad risk management.

I have been successful and unsuccessful with futures so I am not as consistent as I would like of course. I wonder if my ability to hodl overnight in stocks as well as getting in at 50 or 100 share lots instead of 500 (minimum spy qty based on a 1 lot emini) would allow me to get a feel for the market before going in large. I am not saying a 1 lot in futures is large but in stocks 500 shares is a good chunk of the spy.. thats roughly 140,000 dollar trade.

One ES futures contract moves at $50/point - that's the same as trading a 50 share lot of stocks. If you are comfortable trading 50 shares of stocks at a time, I don't see why there would be any issues trading contracts of ES other than the margin requirements needed- but that also applies to stocks.

 

[REDP1800]

actually an emini contract is $ 50 x price so.. 50x 2614= $ 130,700 Dollars. I fyou take the SPY etf.. at 263 you get 496.95 shares of a an etf priced at $ 263 a share. that is a lot more than 50 shares of stock. I appreciate what you wrote but wasn't really looking for advice on entry and exit. anythig to add about YOUR experience of stock tradign vesus futures trading intraday? we all know about leverage and taxes..anything else..

 

[CALLumbus]

One ES futures contract moves at $50/point - that's the same as trading a 50 share lot of stocks. If you are comfortable trading 50 shares of stocks at a time, I don't see why there would be any issues trading contracts of ES other than the margin requirements needed- but that also applies to stocks.

One ES futures contract is more equivalent to trading something between 1000 to 5000 shares, depending on price of the particular share.
Hint: calculate the nominal value of the ES contract to see what amount of money you are moving with just one contract.

 

[Overnight]

...
One ES futures contract moves at $50/point - that's the same as trading a 50 share lot of stocks. If you are comfortable trading 50 shares of stocks at a time, I don't see why there would be any issues trading contracts of ES other than the margin requirements needed- but that also applies to stocks.

There is one problem with your assumption...That any stock you trade is currently $1 per share. So how much money do you need to trade 50 shares of AMZN?

 

[REDP1800]

There is one problem with your assumption...That any stock you trade is currently $1 per share. So how much money do you need to trade 50 shares of AMZN?

what are you the elite trader pop quizzer.. I am nto sure you are allwoed to be typing while driving for UBER.

 

[Overnight]

what are you the elite trader pop quizzer.. I am nto sure you are allwoed to be typing while driving for UBER.

Dude, I was addressing soulfire there. Stay out of the subthread unless you can answer the question? So how much money would you need to trade 50 shares of AMZN? The hell is wrong with you?

Oh, I'll add some spice to it...How much money would you need to trade 50 shares BRK.A? I think after looking at that, you guys get the point.

 

[tiddlywinks]

So how much money would you need to trade 50 shares of AMZN? The hell is wrong with you?

Oh, I'll add some spice to it...How much money would you need to trade 50 shares BRK.A? I think after looking at that, you guys get the point.

Regardless of the stock or the price of a stock, 50 shares will gross 50 dollars with a one point favorable price movement, not to be confused with a favorable incremental price movement.

In that way, comparing a 1 point favorable movement in ES, again, not to be confused with a favorable incremental price movement, grosses the exact same 50 dollars.

Soulfire merely "normalized" the value of 1 full point. Which, due to increment differences between instruments and/or vehicles, is appropriate.

 

[REDP1800]

that is about the worst way I have ever seen anyone not understadn true risk.. u gotta be kidding

 

[wlnd]

the key advantages daytrading + trading longer tf on stocks, as opposed to futures:

1) much more potential trades. there are much more stocks than futures

2) smaller risk sizing, more diversification: trading stocks

if trading a 50k a/c @1% per trade = $500. $300-500 is the average amount i've observed as minimum risk needed for a meaningful stop loss, when trading $10/tick upwards futures contracts. have spotted $100 (or 10tick stops) in less volatile conditions on 1lot of GC, but these are rare. in low-normal volatility conditions, you can probably find $150-$250 stops on $5/tick contracts like NQ, RTY, YM on 1 lot. however, these are thinner/volatile markets vs GC, ES, 6E

you can scale very much lower than $500 when sizing for stocks, & have relatively more "diversification" over a large number of trades, holding many positions at one point in time

3) taking partial positions on/off, is more doable on stocks. vs futures, where the bare minimum risk to trade 1lot usually varies 300-500usd on 10usd/tick contracts

_________
key disadvantages trading stocks

1) higher capital required

min 50k usd a/c to overcome pattern day trader rule & trade comfortable to post enough margin on a reg T a/c. you will need to maintain minimum 125k usd for a portfolio a/c for a higher 6.6 leverage

2) gap risk, on the non-24hrs nature of stocks

3) when trading patterns, entry is sometimes not optimal *if stock gaps to trigger pattern entry at market open

4) before market open / after market close earnings gap risk

5) algo sub-pennying games on less liquid stocks. will most likely get sh*tted by algos when using pending stop losses, or pending entry stops

6) more expensive tick data. eg. 150usd/mth upwards from iq feed, vs <50usd/mth for cme futures for non-professionals

7) alot of stocks outside US cannot be shorted

8) etfs offer opp to trade more exotic emerging markets indicies for eg. however, futures on the same underlying should be the 1st choice if one has access. futures demand less margin vs etfs & futures are almost 24 hrs to get in or out of positions