What are the advantages of day-trading stocks over futrues?

Q

qualcomtrader

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.
 
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.
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it really depends on what you understand. Some prefer stocks and some prefer futures. Few people make good money, so it really is more of WHERE CAN YOU FIND A TRADING EDGE??? rather than the particular instrument
 
I tried options for a while until I realized the problems with liquidity and large spreads were just not appealing to me.

I tried trading stocks that had similar moves to the S&P 500 but larger moves, in other words, high beta stocks. But, I noticed sometimes those stocks followed the indices and sometimes they seemed stubborn. So, I ended up trading symbol SSO partly because I could get in and out using the ElectronicCommunicationNetwork BATS with open market orders with a spread of one penny. However, I don't like the trading gaps in the stock market and ended up choosing Forex.

I wrote a long message on how I view risk in Forex and various ways of managing your trades. It's here: http://www.elitetrader.com/vb/showthread.php?threadid=176782

I haven't completely considered futures partly because the only google searches I found on trading volumes in futures showed the most active contracts only trade 2 million shares a day. When I traded stocks, I could have a spread of 5 cents for stocks trading between 3 and 6 million shares a day (whether NYSE or Nasdaq) with an open market order. If I tried to use a limit order, I had to chase stocks sometimes 20 or even 50 cents before getting a fill. You can always try leading limit orders but I prefered using open market orders on SSO which at the time traded I think at least 90 million shares a day and BATS had around one third the volume (at the time) which meant probably 30 million shares a day.

There's a thread on liquidity on Forex here: http://www.elitetrader.com/vb/showthread.php?s=&threadid=176689 where it's pretty clear that in Forex, you could trade 10 standard lots at a time fairly easily which could possibly make you $10,000 in profits a day in a single large move.

Anyway, I've been having pretty consistent fills with my mini lot account at GFT Forex.
 
Quote from clambill:


I haven't completely considered futures partly because the only google searches I found on trading volumes in futures showed the most active contracts only trade 2 million shares a day. When I traded stocks, I could have a spread of 5 cents for stocks trading between 3 and 6 million shares a day (whether NYSE or Nasdaq) with an open market order. If I tried to use a limit order, I had to chase stocks sometimes 20 or even 50 cents before getting a fill. You can always try leading limit orders but I prefered using open market orders on SSO which at the time traded I think at least 90 million shares a day and BATS had around one third the volume (at the time) which meant probably 30 million shares a day.
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This is extremely flawed logic. There is way, way more liquidity in futures. One contract is worth way more than one share in dollar value. Consider the S&P eminis... trading at 1060 there is a dollar value of $53k per contract, which at 2 million contracts per day is the equivalent of a $53 stock trading 2 billion shares a day.
 
Yeah personally i think they keep the info on futures so limited because they don't want a rush of people to go in and then they have to change the tax laws on them.

The biggest advantage ends up being the 60%, 40% split on your taxes
even if you day trade 'em 60% is still considered long term gains while 40% is considered short term gains.
In stocks 100% is considered short term

Correct me if I'm wrong. I've traded a few this year but I'm stll working my way into them and I haven't had to deal with the tax issues yet.
 
Quote from Jym:

Yeah personally i think they keep the info on futures so limited because they don't want a rush of people to go in and then they have to change the tax laws on them.

The biggest advantage ends up being the 60%, 40% split on your taxes
even if you day trade 'em 60% is still considered long term gains while 40% is considered short term gains.
In stocks 100% is considered short term

Correct me if I'm wrong. I've traded a few this year but I'm stll working my way into them and I haven't had to deal with the tax issues yet.
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60/40 don't mean diddlly if you don't make money...

I learned all my price action patterns from trading futures...
I make money on stocks using those price action pattern.
I lose money in futures using the same patterns. Probably because I'm not hedged long short and betting oneways.
 
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