Moving from futures to stocks

[TraDaToR]

Hello,

I have been a Professional ag futures trader for 10 years now and I am wondering if someone has ever made a successful move from futures to stocks...

Long story short, I have been profitable with quite stable returns( 1 down month per year on average ) but I always had the impression that due to the number of instruments, the disaggregation of order books, the rebates...Stock trading was a bit simpler. I have never seen people as consistent in futures trading as people like Szeven, Nordik in the P§L threads who barely had a losing day on a given year.

Also I have never been able to break the 500 k per year mark in futures, and I sometimes think there is simply not enough potential in ag futures...I am getting stuck in what I know but perhaps discovering a new area would revive the fire I had for trading when I was younger.

( Yes I am in a drawdown...LOL )

Thanks

 

[rmorse]

IMO, stick with futures. You can look into other products in the futures markets. The natural leverage and tax advantage is to your benefit.

Bob

 

[TraDaToR]

Thanks rmorse, I live in Switzerland so the tax advantage doesn't apply. Perhaps you are right, I had a little success trading metals, perhaps I should try to get back in that area as well.

 

[rmorse]

Do you trade options too? Do you only trade for your own account? Maybe a good way to grow and move forward would be to manage others money too.

 

[TraDaToR]

No. I don't trade options. I tried some stratégies but have never been profitable or more exactly never had the time to create an algo to handle passive orders that would have made those strats profitable.

I once met a potential "backer" to manage OPM, but the problem is that they usually want a really low percentage of capital invested in margin( 5-10% ) so to make it worth, based on 30-50% split, I would need big bucks from my backer. I generally use almost 50% of my account in margin , so to generate the same revenue the account would have to be 10 times larger...

 

[rmorse]

You should know that a 30-50% split is not typical. Without a management fee, 25% on net profits would be more typical. Lower margin use allows them to use a master/sub-account structure and allocate to more managers with the same funds. Anything over 25% become difficult to manage that way as most FCMs won't allow you to use anywhere near 100% of your margin.

 

[R1234]

I trade in futures markets (all the asset classes) and US stocks. I can say that for me they are good offsets to each other because of the lack of correlation.

But looking at differentiated opportunity and richer edge set, stocks are so much better. For example in my pair trading there are unlimited combos each with low or no correlation . And In my intraday stocks outright trading I trade reversion and trend and I can trade 20 different tickers today from yesterday.
If you're interested in stocks go for it. You will do yourself a disservice by limiting your world to only futures.

 

[Redneck]

Stock trading was a bit simpler. I have never seen people as consistent in futures trading as people like Szeven, Nordik in the P§L threads who barely had a losing day on a given year.

IM "very" HO


I don't think one is easier or simpler

I think each different - with their specific eccentricities..., with different internal / external influences

I believe consistency has more to do with the individual..., than the instrument



As for stocks - you'll need to find one / ones with adequate volume..., liquidity..., movement..., and volatility - to suit you / your personality / your trading

It also.., imo..., better to stick with one..., or a very limited number (of the same characteristics (personality type))..., than having a basket and be jumping around

Otherwise you'll need to be switching gears in your head too often (hard to do / sustain / repeat - over a prolonged period)


Come on in - the water is just fine


RN

 

[i960]

Long story short, I have been profitable with quite stable returns( 1 down month per year on average ) but I always had the impression that due to the number of instruments, the disaggregation of order books, the rebates...Stock trading was a bit simpler.

Sorry, I've found the exact opposite. Everything involving equities is more complicated. Things we do naturally in futures like taking shorts are not as straight-forward with equities. There's borrowing costs, dividends for starters. Secondly margin is not nearly as beneficial with equities (unless you're prop) as compared to futures contracts (which don't involve any borrowing costs either).

If you're in a drawdown right now the right solution is not to abandon ship and throw everything out the window - it's to take a step back and be patient. Identify what you know how to do and recognize it's not working right now and that doesn't mean it won't always work. WRT to 500k/year, that's a matter of account size and the risk you're willing to take and you know that. I highly doubt liquidity is the issue.

For example in my pair trading there are unlimited combos each with low or no correlation

Wait a second, not trying to be a jerk, but why would you ever be interested in trading pairs with low or no correlation? Of course there's unlimited combinations if you throw correlation out the window - but who's signing up to spread 100k$ worth of Pepsi against IBM? If there's not correlation there's got to be some kind of cointegration at play.

 

[Trader13]

Hello,

I have been a Professional ag futures trader for 10 years now and I am wondering if someone has ever made a successful move from futures to stocks...

I can't think of any reason someone would solely trade ag futures with modest success for so long unless your system is based on seasonality in that market. Why else would you trade ags? You can find more liquidity and price volatility in so many other markets.

If I'm correct, then the question becomes, which other markets and trading instruments would align with your seasonal trading system so you can diversify and scale up? Could be some stock sectors or other futures markets.