The Problem with Equities

[tenthousandmen]

Day trading equities versus futures or Forex:

Less than a trillion dollars was traded through ALL of the equity markets in 2011, yet trillions has cycled through the Forex and futures markets globally in 2011.

Why is getting a piece of a <$1t pie as easy and as simple as finding stocks with unusually high volume and attempting to trade them? (this is what all the equity prop firms say) Maybe the ETF and leveraged ETF market will bring the price movement necessary for highly trade-able, inefficient markets.

Maybe I'm wrong here, so please add light to my confusion.

 

[intradaybill]

Quote from tenthousandmen:

Day trading equities versus futures or Forex:

Less than a trillion dollars was traded through ALL of the equity markets in 2011, yet trillions has cycled through the Forex and futures markets globally in 2011.

Why is getting a piece of a <$1t pie as easy and as simple as finding stocks with unusually high volume and attempting to trade them? (this is what all the equity prop firms say) Maybe the ETF and leveraged ETF market will bring the price movement necessary for highly trade-able, inefficient markets.

Maybe I'm wrong here, so please add light to my confusion.

Maybe the answer is leverage. 50:1 in forex, 2% to 10% margin in futures, only 4:1 leverage in equities with a day pattern trader stupid rule. All charts look the same anyway, most choose the leverage.

 

[clearinghouse]

Quote from tenthousandmen:

Day trading equities versus futures or Forex:

Less than a trillion dollars was traded through ALL of the equity markets in 2011, yet trillions has cycled through the Forex and futures markets globally in 2011.

Why is getting a piece of a <$1t pie as easy and as simple as finding stocks with unusually high volume and attempting to trade them? (this is what all the equity prop firms say) Maybe the ETF and leveraged ETF market will bring the price movement necessary for highly trade-able, inefficient markets.

Maybe I'm wrong here, so please add light to my confusion.

I guess you lost me at what "all the equity prop firms say". No one told me such a thing, and in fact, they say different things each year as their winning traders stop being winning and a new
crop of winning traders rolls in.

 

[ChkitOut]

Quote from intradaybill:

Maybe the answer is leverage. 50:1 in forex, 2% to 10% margin in futures, only 4:1 leverage in equities with a day pattern trader stupid rule. All charts look the same anyway, most choose the leverage.

To your point, I think equity markets should have a dynamic leverage model as do futures, based on volatility and liquidity. If I'm trading SPY for example, I should be able to trade at way lower margins than if i'm trading some smallcap stock, you get the idea.

Think about how robust the equity markets would be if that were the case.

 

[Bob111]

here is different perspective-when you trade forex-the amount of variables,that can move currencies is FAR greater, than amount of variables, that can move the stock. PLUS-there is always few stocks every day,where amount of variables is narrowed to very few(news,some f** up earnings(up or down))..so-you go head and fight all entire world with your currencies and i'm going back to my stocks. yeah..limited liquidity..but i would rather choose that and sure thing trading,where i can make money almost every single day than shot myself with crazy margin and trade something that most of us have no clue,why it's moves..

 

[vincentvega]

The spreads are wider in stocks and it is more difficult to make money as a trader (liquidity) than other markets.

 

[Maverick74]

Some of the problems with stocks is that they only trade 6 1/2 hours a day yet we live in a 24 hour world. So stocks gap a lot. Also, a lot of the big trades don't trade on the exchanges but through dark pools. Then of course you have the HFT's. Plus they have earnings every QTR, the constant upgrades and downgrades.

Of course there are some that view all of those things as pluses and base trading strategies around them.

Futures trade 24/6. So there is more of a rhythm to them. Of course they spike as well on economic data, etc. Also when you trades futures, everyone trades at the same spot. Sure, you can trade OTC but then you have to accept the basis risk on cash.

Prop firms push equities for one reason and one reason only...commissions. Not because there is more opportunity.

 

[flipside21]

Quote from Maverick74:

Some of the problems with stocks is that they only trade 6 1/2 hours a day yet we live in a 24 hour world.

Futures trade 24/6.

If trading 24/6 is your thing. I think a lot of people cannot handle trading for so many hours glued to the computer screen, which is simply too tiring and stressful. The eyes and body need to rest.

 

[Maverick74]

Quote from flipside21:

If trading 24/6 is your thing. I think a lot of people cannot handle trading for so many hours glued to the computer screen, which is simply too tiring and stressful. The eyes and body need to rest.

That's not what I meant. I meant that by having a 24 hour market, price flows better then when you have a start and stop market. Most futures traders trade fewer hours a day then equity guys.

 

[Wide Tailz]

Quote from tenthousandmen:



Maybe I'm wrong here, so please add light to my confusion.

Since The Market pays successful speculators for helping it move toward the optimum price level, and stocks appear (from a liquidity standpoint) to be inferior to futures from a suitability standpoint for this type of activity, do you think they are a less efficient or more efficient market?

Seen another way, the successful speculator is providing liquidity, at the correct time, to correct market inefficiencies. Since stocks are less liquid than futures, do you think there is more or less opportunity for the professional liquidity provider?

Chicken feed? Consider the mongoose, a highly dangerous animal to non native ecosystemz for its extremely effective tactics of predation...... it goes where the jackal, coyote, wolf, fox, and snake aren't willing to go..... and makes a killing