QQQ vs. NQ E-MINI

L

larrybf

I stopprd trading stocks over a year ago and now trade only futures. I prefer trading futures BUT system failures (globex, broker, etc) recently have made me nervous since I trade 5 contacts which is equal to 4000 shares of QQQ. MY QUESTION ISwould I be better off switching back to the QQQ's or would trading that size cause its own problems?? (Execution, slippage etc)> Thanks
 
Your commission in the E-minis compared to the QQQ's and the tax benifits are very good reasons to trade the futures
 
If you have enough capital, you should perhaps consider opening a separate brokers account to trade the Q's in the event of a system breakdown with your futures account. This will allow you to get the benefit of trading the futures but with a safety net.
 
advancedfutures,

What are the tax benefits of trading futures? Are you referring to the wash-sale rule?

TIA,
Dis
 
Futures are generally treated more favorably and receive "60/40"
treatment. Equities require a longer holding period for favorable tax treatment.
 
Personally, I would never trade QQQ again for my situation. Futures are better in ever respect for the way I trade. Lower commissions, much deeper liquidity, less slippage, no partial executions where you pay full commission for shares you don't get, lower spread, and lower taxation for anyone in USA.

Why would you ever want to trade QQQ again? If you can't make money trading e-mini, I doubt you can do it when you have to pay twice as much in brokerage costs to trade QQQ.
 
Originally posted by larrybf
I stopprd trading stocks over a year ago and now trade only futures. I prefer trading futures BUT system failures (globex, broker, etc) recently have made me nervous since I trade 5 contacts which is equal to 4000 shares of QQQ. MY QUESTION ISwould I be better off switching back to the QQQ's or would trading that size cause its own problems?? (Execution, slippage etc)> Thanks
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Larry,

I think the determinants here are the particular trading system you use, the timeframes you execute in and the capital that you have available to trade with.

Let me leave the system out for a moment, because only you know how you trade. Just remember that there are some trading methodologies that are best suited for futures, and others best suited for stocks.

If your timeframe is the 1-2 minute charts, the two securities exhibit different characteristics - for example, the Qs are jumpier and you need to leave larger stops, especially if you actually put them in (as opposed to keeping them in your mind.) There are people who do not want more risk, and that says something. Also, it is very hard to move 4000 QQQs in and out successfully several times a day, catching 20 cents each time.

If you trade the 60 minute charts, Qs are fine, imo, no problem. You can guess the in-between.

Last, it takes an account of at least $15,000 (preferably $20,000) to daytrade 5 NQs with, say, IB. But, it takes an account of at least $40,000 to daytrade 4,000 Qs - better make that $50,000, depending on how cool you are when trading.

Hope this helps :)
 
futures are taxed 60/40.. which means that 60% of your profits are considered long term and 40% short term... also, you get a 1099 at years end with the pl calculated net of all commissions.. so the filing process is very easy.. no noted trades etc that make stock filing a headache..

the leveage, cost of doing business, and tax consequences make futures trading advantageous.. if your system and broker are giving you problems, there are alot of out there that would love to solve them!!!!

cheers,
liza
 
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