Quote from nlck:
I've been only trading futures and spot currencies.
The only way of creating a good risk/reward ratio with stocks seems to be in short-term to intermediate horizon combining a bit of fundamental.(to me)
Sure, futures has a more inherent risk due to leverage. But that could be controlled with a proper money management in my opinion.
Yet, I see many people day-trading only stocks.
Granted, each has its personality/characteristics but is there any prominent advantage to day-trading stocks over futures generally?
I am just curious to know what you all think of this subject.
For what it's worth, I've traded each quite a bit, and my current addiction is the leveraged ETF's.
But the way I make the distinction you point to in the original post is: do you want to trade a single stock, or a group of them.
In other words, by futures, I'm going to assume you are really talking about index futures, meaning that you're not worrying about other futures (crude, natty gas, metals, currencies - why try to compare currency trading to equity trading!! pick a market).
Then, if true, I have found a better edge with groups of stocks over single stocks. But this is probably because I don't spend much time on fundamentals, news feeds, rumors, or watching open book or level II. I prefer to focus on the flow of trades and the chart pattern, and I understand macro news developments better than company releases.
The point is, trading baskets of stocks, or whole markets, negates the effects of the domination by one single trader or institution. Their movements are averaged out, which gives an advantage to you if you think your main asset is reading the chart.
I would say my current favorite vehicle is FAS.
