Why does it seem that good traders go to futures market?

Quote from silk:

I've always felt the advantage of trading stocks is that you have a bunch of different markets to choose from. There isn't an opportunity in every stock every day, but if i watch 100 stocks i can usually find a few decent opportunities daily.

If i just watched 1 stock, or 1 futures contract (i.e. spy) i wouldn't have nearly as many opportunities daily.

By the same logic, i would say a futures trader who just watches SPY and not 10 other futures markets would be limiting himself.

A person can only watch so many markets at once, but everyone should be able to handle watching at least 5-10 at once.

For that reason i don't understand why anyone would limit themselves to just trading S&p futures and nothing else. Perhaps some futures traders here could explain why they just trade 1 market. I would like to understand.

I'm mainly a stock trader, but a few times a month i might feel like i have a good edge in predicting where the s&p is going and i will play the SPY or DIA. Rest of the time i'm looking for sector/specific stock opportunities where i can get more of an edge.
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Hi Silk,

I don't disagree with what you have said but, like I said, I am lazy... I make up for not doing multiple stock positions by trading the equivalent face value on futures i.e. by trading up to 20 cars a time...

The trade-off to my laziness is that I don't get the major occasional runs on stocks benefitting from news... however I guarantee you that your life as a stock trader is more intense than mine... so, as with many things, individual personality has a lot to do with what you trade...

That said, in relative size, you can make a living off anything with reasonable volatility... and, in my view, ES is more consistently volatile than any stock you care to name... bearing this in mind, my philosophy is to make things easy for myself by eliminating the need to scan...

Candle
 
I trade stocks, options, and futures, but I do not perform any nightly scan (used to, got sick of it). I just watch 2 sectors in the stock market, and then watch the ES, NQ and YM. All of my options trades are also in the same 2 sectors that I watch daily. So, I'm trying to benefit from both markets, and still having some free-time.

-FastTrader
 
Quote from TKOtrader:

are futures strickly for daytrading ? or can you position trade them too ?
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You can trade futures any way you wish, but if you are going to take overnight holds, make sure you understand your risks in doing so (no coincidence that the margin requirement doubles overnight...). Additionally understand the risks involved in the position you are holding.

1 futures contract is an awful lot of stock underlying. (It's basically 50k of stock for 1 mini S&P contract and 250k of stock for 1 full sized contract... = roughly 500 SPY equivalent)

best

Natalie
 
Quote from PoundTheRock:



It's the pure market baby. No screwing with specialists, market makers, inside info, low floats, wide spreads, all the sh*t that can screw up one's return.
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don't forget the dreaded "HALTED PENDING NEWS" or "HALTED PENDING NASDAQ REVIEW"

:D
 
Quote from ortega:

What about getting stuck in a limit up/down situation?
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maybe if your trading lumber..lol.

ES/NQ have large limits and you see them coming from a mile away. Never had a problem.

Oh and ES/NQ are only halted on limit down for minutes, so you have a chance to get flat before the close. Unlike stock halts that often stretch over hours and days.
 
Quote from Cdntrader:



maybe if your trading lumber..lol.

ES/NQ have large limits and you see them coming from a mile away. Never had a problem.

Oh and ES/NQ are only halted on limit down for minutes, so you have a chance to get flat before the close. Unlike stock halts that often stretch over hours and days.
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On the other hand how about the spikes from 'wrong' orders that later get broken by the exchange. both ES and YM had this relatively recently. 10,000 YM sold at market and then a couple of weeks later 50,000ES sold at market. In both cases people got hurt when trades near the bottom were broken by the exchange concerned when the institution cried mistake to the exchange.

Then there was the complete failure of Globex about 3 months ago, which resulted in a massive short squeeze qhile the exchange didn't come back online till after the close of day.

There are threads related to each of these occurances.

No type of trading is without its risks or problems inherant in the type of contract or exchange...

Best regards

Natalie
 
Quote from ortega:

What about getting stuck in a limit up/down situation?
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Also, the Stock Index Futures have what is called "Circuit Breakers" - 65 points up/down. Normally, the circuit breaker will last about 5 minutes then trading will resume. These circuit breaker limits change from time to time on "GLOBEX". There are no daily limits on Stock Index Futures i.e. Dow, NASDAQ, S&P 500 Futures.

However, the market can go to 1,000 points and they would keep trading. The first couple of Interest rate cuts by the fed (unannounced) led the Dow Jones & NASDAQ 100 futures up over 600 points in the matter of seconds!!!!
The E-mini S&P 500 moved 110 points!!!

In Commodity Futures such as Corn, Soybeans, Lumber, and Coffee have daily position limits and limit up/limit down trading.
But to answer your question you would never want to trade these instruments without doing some incredible amount of research. For example: Lumber has been known to go Limit Up/Limit Down and stay there for DAYS!!!
Coffee can move 1600 points in a gap up move on the open.
Cocoa has been known to literally move "THOUSANDS" of points in the last 3 years.

Finally, Commodity Futures contracts are the most complicated markets on the planet!!! unless you really want to get your face ripped off stay away from these instruments and stick to the Stock Index Futures, Single Stock Futures, Currency Futures.

Stay away from Interest Rate Futures also unless you would like to experience a 2 point Limit Up/Limit Down move.
THESE OCCUR QUITE OFTEN IN THE BOND FUTURES.

:)
 
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