ET is like a pack of dogs you throw a ball out down the road who then chase after it mercilessly, attempting to kill each other in the process. In the meanwhile they don't seem to notice the pieces of steak thrown in the other direction.
Why are Futures and Forex more popular than stocks for short-term trading?
- Thread starter helpme_please
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ET is like a pack of dogs you throw a ball out down the road who then chase after it mercilessly, attempting to kill each other in the process. In the meanwhile they don't seem to notice the pieces of steak thrown in the other direction.
Yes. Huge advantage when trading futures. I posted this on another thread :
http://www.investopedia.com/univers...-to-trading-e-mini-futures/tax-advantages.asp
* FOPs on ES and other major contracts available 24h throughout the week. Whilst not the best spreads on off hours they're still usable and at this point a strong competitor to SPX options which are only open during market hours.
* SPAN margining available regardless of account size. No need to qualify for a portfolio margin account.
* Reasonable behavior in the face of high volatility, 8/24 being a great example. Futures hit their limits and continued moving after limits were released. Equities went nuts.
* SPAN margining available regardless of account size. No need to qualify for a portfolio margin account.
* Reasonable behavior in the face of high volatility, 8/24 being a great example. Futures hit their limits and continued moving after limits were released. Equities went nuts.
Your last point is a great one. One thing that can cause havoc when trading equities are the moves % wise. You see it from time to time in some of the drug related stocks when when news comes out about one of their drugs/pending FDA decisions. Some of them can move 40-50% in seconds. Also Aug 24th was a great example. While the ES did plummet, it was somewhat controlled while some of the big name equities printed down 20% due to serious liquidity issues. But to be honest anyone who saw that the ES was down 85 at 9:29 a.m. knew it could be a shit show and probably should have traded lighter or waited a little bit. This was a 2008 like move. The stories I heard from other traders/firms on that opening were insane as far as P/L swings.
Also with futures there are also ways to stay away from times when things get nuts:
Don't trade too close in front of major economic releases, inventory reports (CL and NG), monthly crop reports for Ag futures.
Don't trade right on the opening of the underlying cash opens or closes (ES) or regular openings/closes (Ag futures).
That's true. I've had old high school friends ask me "why aren't you trading forex" as if forex is somehow an easy market, the person who did this was a fairly poor trader who was blindly focusing on leverage and how much he can make.
@stevegee58
plenty in the thread aren't American, in Europe and Asia there is almost no difference tax wise.
Absolutely, I had futures in mind as I've never traded forex myself.
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.
Not all strategies have the luxury of waiting in queue and being gamed by faster players, also not all limits are hit and the market might just move away. ES for example has a very big minimum tick especially if you're trading the 5-20 minute time-frame.
There's a thing called strategy diversification and trading multiple uncorrelated instruments (asset diversification). Diversification is as relevant in short term trading as it is in long term trading, you can't build the best equity curve following only one signal.
Why amazing?
As American it is maybe difficult to understand, but there are Non Americans trading futures too. There is a world outside of the US too.
And for them taxes might not be an issue. For me taxes are no issue. So why mention it?
While casting me as an arrogant, small-minded American you've shown your own American-hatin' attitude.
- I'm fully aware there are non-American posters here
- I'm fully aware many non-American traders have different tax structures
- Why mention it? Because the majority of posters on ET are American and will benefit from the information.
Why would you
Post # 12 - The link I provided mentioned the 60/40 rule plus many other reasons why futures are better for intraday trading. Hopefully the OP took the time to read it; it answered his question completely.