Moving from futures to stocks

[TraDaToR]

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.

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With the trading we were doing on the trade ideas thread, I realized my best trades were in the back months where liquidity in fact is an issue. The more liquid the spread gets, the more trading becomes 50-50 and the edge diminishes.

Don't worry about abandoning ship yet. It's just that ags are completely dead right now so I am looking for alternatives in case it continues...

 

[TraDaToR]

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.

I don't know why I like ags so much. At first I was trading metals and energy as well and started to get interested in ag Fundamentals. After a while, I decided to become a specialist to trade longer term larger trades. You know, physical traders specializes in only one market sometimes. But I agree it wasn't the brightest thing to do.

 

[R1234]

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.

low correlations between pair return streams. ie. there is no correlation between my PEP/KO system and HD/LOW system. How does that look when you mush together 200 or more of these systems? Really good!

 

[MarketOwl]

You can liken the financial markets to baseball. You have different levels of play, you have college baseball, the minor leagues, and finally the major leagues.

College baseball is the OTCBB market, where you have mostly amateurs being used as sacrificial lambs and pawns in the larger game to enrich those who rule its market (promoters, boiler rooms, companies profiting from selling stock, not products/services.).

The minor leagues are the listed stocks, with small caps the A level, mid caps the AA level, and large caps the AAA level. The higher the level, the more efficient the market and the stronger the competition. Most of the institutions and HFTs are crowded into the AAA level, and to a large extent, the AA level. Small caps, or the A level, have more of a mix of retail and institutional players, and if the volume is large enough, HFTs.

Lastly, the big boys play in the futures market, the major leagues. This is all HFTs, large banks, hedge funds, and other institutions at war with each other in a negative sum game. While theoretically zero sum, the commissions/exchange fees collected by the brokers and exchanges make it strongly negative sum. And it is not a trivial sum. It makes it extremely difficult to beat this league due to the strong competition and efficiency of the market.

Even among the futures markets, as you go up the liquidity curve, the higher the liquidity, the more competition and the more difficult it is to make money. The all stars in the league congregate around the big markets, stock index, FX, fixed income, and crude oil/gold. The smaller markets like the ags, softs, industrial metals, livestock, etc. are the journeymen. A bit less efficient, but still not easy.

Only seasoned professionals make consistent money in futures. You are not going to beat the futures market by reading some trend following drivel regurgitated by Covel or with an Al Brooks e-mini trading course. It takes disciplined money management, a resilient and repeatable edge, and constant data analysis. Unfortunately, the futures market seems to attract get rich quick types attracted to the huge leverage but not willing to put in the work or manage risk well enough to be profitable.

99.9% of people on ET should stick with stocks.

 

[jono5900]

You can liken the financial markets to baseball. You have different levels of play, you have college baseball, the minor leagues, and finally the major leagues.

College baseball is the OTCBB market, where you have mostly amateurs being used as sacrificial lambs and pawns in the larger game to enrich those who rule its market (promoters, boiler rooms, companies profiting from selling stock, not products/services.).

The minor leagues are the listed stocks, with small caps the A level, mid caps the AA level, and large caps the AAA level. The higher the level, the more efficient the market and the stronger the competition. Most of the institutions and HFTs are crowded into the AAA level, and to a large extent, the AA level. Small caps, or the A level, have more of a mix of retail and institutional players, and if the volume is large enough, HFTs.

Lastly, the big boys play in the futures market, the major leagues. This is all HFTs, large banks, hedge funds, and other institutions at war with each other in a negative sum game. While theoretically zero sum, the commissions/exchange fees collected by the brokers and exchanges make it strongly negative sum. And it is not a trivial sum. It makes it extremely difficult to beat this league due to the strong competition and efficiency of the market.

Even among the futures markets, as you go up the liquidity curve, the higher the liquidity, the more competition and the more difficult it is to make money. The all stars in the league congregate around the big markets, stock index, FX, fixed income, and crude oil/gold. The smaller markets like the ags, softs, industrial metals, livestock, etc. are the journeymen. A bit less efficient, but still not easy.

Only seasoned professionals make consistent money in futures. You are not going to beat the futures market by reading some trend following drivel regurgitated by Covel or with an Al Brooks e-mini trading course. It takes disciplined money management, a resilient and repeatable edge, and constant data analysis. Unfortunately, the futures market seems to attract get rich quick types attracted to the huge leverage but not willing to put in the work or manage risk well enough to be profitable.

99.9% of people on ET should stick with stocks.

I endorse this comment......................

 

[nestle]

I thought the normal path was stocks to futures

 

[murray t turtle]

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

%%
Most likely; some do in ETFs.

Single stocks are more risky unless you buy or sell 30 or 500/+ different stocks;[etfs] stocks dont trend as well, but well enough. The moves are so different; still sometimes ,some ETFs pay dividends..........................................................NOT a prediction; hope this helped, it helped me.