Stocks VS Futures

[Jayford]

Sure they can collapse, but no such thing as a commodity going "bankrupt." A collapse in a futures position could bankrupt you however. Having a highly leveraged position in which you cannot exit (limit moves usually give you no opportunity to trade) is no cake walk.

Such a move can make you rich on a single trade as well however. Stanley Kroll comes to mind (copper). It wasn't limit moves, but a sustained rally that made him rich on one long position. He did add and subtract to it, but essentially one "trade".

Single stock futures could act that way I suppose (bankruptcy), but I don't know anyone who trades em. Too thin.

 

[trade4ever2day]

Quote from YoungOne:

I was wondering if others could share their opinions about trading stocks versus futures. I'm talking about day trading. I've noticed that many go to futures after stocks, why is this? Liquidity? Is it better to learn stocks than move over or just start with futures? I'd appreciate any input, mainly from people who have traded both or switched from one instrument to the other.

A stock can go to zero, literally. Futures never go to zero.

Then, stocks can be easily manipulated by use of inside information. Futures cannot.

But remember that futures is a pure zero-sum game. By this a mean a stupid investor can make money in a stock just because the company made a nice profit. In futures to make money you must be smarter than your "other side" of the trade. Usually, the other side is one who knows the market better than you.

The conclusions are yours.

 

[Aok]

Quote from Nope:

The commodity futures market can move lock limit down or up against your position. Perhaps for days in an extreme situation. That is likened to a collapse of sorts.

rare, but true. Enjoyed a nice 3 day lock limit down in pork bellies once. Fortunately hedged it with hogs but a sickening feeling.

Another difference with futures vs stocks is structural vs cyclical. Stock rotation is cyclical, this sector that industry is hot or not.

In futures markets the trends can be structural and last for years. See gold, oil, yen, dollar, wheat etc, etc.

If you have uranium reinforced gonads with minimum capital you can build a large position and with the leverage and internal financing power of futures, ride a monster wave See Cutten/Wheat or Livermore/Cotton/Coffee.

Harder to do in stocks because of margin requirements.

Also there is nothing that says you must trade with minimal margin. Risk relatively speaking is up to you. Just because you have $500 day trading margin on Emini family doesnt mean you should trade 10 contracts with 5k account. Nothing wrong with trading ONE car on 10k account. Live to trade another day.

 

[andretrader]

Quote from Aok:

If you have uranium reinforced gonads with minimum capital you can build a large position and with the leverage and internal financing power of futures, ride a monster wave See Cutten/Wheat or Livermore/Cotton/Coffee.

.

I agree, if you look at the biggerst trader around, Bruce kovner, Livermoore, Tudor Jones, Soros, they have made their BIG money inn futures, commodities, and currency...
and on theese huge waves..

 

[andretrader]

I didnt understand this limit down,
isnt it possible to sell your posistion when it is limit down,
and what does that mean?

or can you change your price a little and sell?

 

[Don Bright]

Quote from andretrader:

I didnt understand this limit down,
isnt it possible to sell your posistion when it is limit down,
and what does that mean?

or can you change your price a little and sell?

They stop trading for a certain period of time, depending on time of day, then reopen, possibly go limit down again. You have to be aware of the trading curbs etc.

Don

 

[-ooO-(GoldTrade]

Kroll
Sorry it took me so long to chime in. But I have been relaxing on a tropical island so I may be a little behind. This post seemed to have been lost in details.

Stanly Kroll who has made millions on one trade, said that the difference between the markets was mainly leverage; the basic needs for a sound trading strategy, using risk control and discipline are similar to both.

Buy what’s going up, sell what is going down, with a protective stop still applies.

 

[88888888]

But remember that futures is a pure zero-sum game. By this a mean a stupid investor can make money in a stock just because the company made a nice profit. In futures to make money you must be smarter than your "other side" of the trade. Usually, the other side is one who knows the market better than you.


Do you consider stock index futures (such as NQ, ES, etc) are zero-sum game as well?

if they are zero-sum game, does that mean, QQQQ and SPY are also zero-sum game?

 

[jeb9999]

Quote from 88888888:


Do you consider stock index futures (such as NQ, ES, etc) are zero-sum game as well?

if they are zero-sum game, does that mean, QQQQ and SPY are also zero-sum game?

All futures markets are zero sum game.

ETFs are not zero sum game because no one is required to take the other side.

 

[88888888]

All futures markets are zero sum game.

ETFs are not zero sum game because no one is required to take the other side.


Assumming you buy (during normal trading hours) NQ and QQQQ at the SAME time and later sell (during normal trading hours) them at SAME time, do you expect to have virtually SAME gain/lost?

If they have SAME gain/lost, what is so significant about "zero-sum"?