Why are Futures and Forex more popular than stocks for short-term trading?

d08 said:
Many stocks are completely uncorrelated or even negatively correlated providing huge advantages in diversification. It's amazing how under-appreciated proper diversification is. To my knowledge there are no futures or FX with auction orders, which means you are forced to have slippage and face relatively high minimum ticks.

For most traders who get into FX and futures, the attraction is purely about leverage.
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Is this what you are referring to?
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Auction Orders
An auction order is entered into the electronic trading system during the pre-market opening period for execution at the Calculated Opening Price (COP). If your order is not filled on the open, the order is re-submitted as a limit order with the limit price set to the COP or the best bid/ask after the market opens.
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I see no advantage to use auction orders if you are trading futures intraday. If I want to avoid slip I just place my limit order in the que.

Yes, investors should seek diversification. The question was about short term trading. I applaud your ability to concentrate on multiple markets/products and trade them successfully. Me? I have the attention span of a Hamster so in my case it pays to focus on one product.:)

(on edit- it depends on what your definition of "short term" trading is. My definition is 5 to 20 minutes.
 
d08 said:
For most traders who get into FX and futures, the attraction is purely about leverage.
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Or being brain washed by their broker or forex bucket shops ( spread betting, CFD vendors and etc), or even by those fake trading guru that sell education that never been profit in trading for their whole life.
 
volpunter said:
Really? So if someone offers you a bet that has a probability of winning 9 out of 10 times but the requirement is that you have to put up 10 million USD. You then in turn borrow 10 million from the bank. You do not call that a favorable risk/reward ratio with a sky high risk of ruin?
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You have to obviously see what there average win/loss ratio is. If they average lets say in CL 10 tick winners but their losers are 100 ticks, or even worse they are one of these martingale types who average down then yes, it will lead to ruin. Look at that clown who traded Russell futures in that chat room he ran. Forgot his name. It's on here. He had like 200 straight winning days of like 200-600 dollar winning days. Then lost 300k in one day.

Win % means nothing until you look at average winners vs average losers.

Leverage for some who can manage it is a great thing to have in your arsenal. For those who don't have a clue on risk management it's an obvious disaster.
 
Absolutely. And that was exactly my point, some here seem to have not the slightest understanding about basic probabilities.

EPrado said:
You have to obviously see what there average win/loss ratio is. If they average lets say in CL 10 tick winners but their losers are 100 ticks, or even worse they are one of these martingale types who average down then yes, it will lead to ruin. Look at that clown who traded Russell futures in that chat room he ran. Forgot his name. It's on here. He had like 200 straight winning days of like 200-600 dollar winning days. Then lost 300k in one day.

Win % means nothing until you look at average winners vs average losers.

Leverage for some who can manage it is a great thing to have in your arsenal. For those who don't have a clue on risk management it's an obvious disaster.
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volpunter said:
Absolutely. And that was exactly my point, some here seem to have not the slightest understanding about basic probabilities.
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Are you family from Marketsurfer? His twin brother?
You twist your opinion like MS does.

You agree with EPrado. It is funny that two of my postings about this discussion received a like from EPrado. I assume that this means that he likes what I wrote. And now suddenly you have apparently the same opinion?
 
Okay let's talk about things NOT related to leverage:

* Extremely simple to trade: long or short are the same with no margin loans or hard to borrow nonsense.
* Much more favorable 1256 contract tax rules.
* Markets open almost 24h on business days.
* Straight forward commission prices per lot (2$ to control 100k isn't expensive).
* The ability to trade the curve (front vs back month contracts). You cannot do that with equities.
* A single non fragmented exchange free of latency arb/no risk/ripoff bots (there's still HFT but they cannot front run you via another quote on a different exchange).
 
helpme_please said:
Wouldn't there be fewer trading opportunities in futures and currencies as a result?

Why are futures and forex more attractive?
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With futures, 1 lot of E-mini S&P 500 is equivalent to trading roughly 500 shares of SPY.

Depending on what type of equity account you have, it can take from a minimum of $25k to $100k to trade 500 shares of SPY when SPY trades around $200/share.

However with futures, you can trade 1 lot with less than $1,000 intraday margin, yet the moves in P&L will be the same as trading 500 shares of SPY.
 
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