why trade prop when you can retail daytrade futures with same 20:1 margin

[Rock and Ice]

Quote from Mercor:

Assume you use no margin, the risk is the same. Just because the futures exchange requires a small margin does not mean you can't allocate more as backup and just hold it in your account (use T-bills notes to earn interest)

Futures move maybe 2-4% on a volatile day, many stocks move much more then that. I would say that futures are less volatile. Nothing worst then some "expert" downgrading his opinion on a stock then watching it tank. That’s scary.

At least shocks in the futures market are more fundamental based.

I disagree - the risk is not the same. There are many futures contracts out there and they are all different in terms of leverage and contract value. Some markets have limits, and a strong move can activate this limit very quickly.

The mini contracts, OK I agree with just 1 contract you aren't likely to get hurt too bad, but again, it's not a true comparison with stock and future, unless the trade value is equivalent.

 

[Rock and Ice]

Quote from roadstar4:

another big difference:

with stocks unless you trade the very huge big ones...,
you can't enter a million dollar position in a split second (15 ES contracts), without moving the market...

in stocks most of the times your order moves the market.

and a single tick is not worth your monthly rent.

YES, this is major factor and advantage. The slippage can be very small to none in futures. There's so much money on the line and it's so much easier with just single contracts. My orders are always filled instantly.

 

[Rock and Ice]

Quote from TradStSOX:


my concern about prop is their ability to see my hands...
wise).

I agree with you here. You can guarantee that the firm, once they detect you are a consistent and profitable trader, will try to reverse engineer your methods...to try and duplicate it to make more money.

However, if they would actually be successful at this, that's another reality. Unless you are 100% mechanical, it's impossible for them to know what's going on in your head.

Privacy though? Forget it.

 

[allenhobbs]

Quote from cold:

what I don't get with any of you people, and I guess what separates me from the rest of you is this

I don't want to trade stocks cause they are slightly easier to trade

I want to trade futures and FX BECAUSE they are hard and because if I can trade futures and FX == I can trade ANYTHING

see how my attitude is the right one for this biz

Ditto.

 

[allenhobbs]

I searched extensively for an equity prop to back me up to trade the ES only and found no takers. Most admitted it wasn't a profitable arrangement for them and the risk scared them too.

If you're hell bent on trading size in the ES, for example, and have a proven track record, try getting hired at a small hedge fund. You won't have any funds at risk and you can put on large positions. But don't expect anywhere near the payout that props give.

 

[syswizard]

Quote from allenhobbs:

I searched extensively for an equity prop to back me up to trade the ES only and found no takers. Most admitted it wasn't a profitable arrangement for them and the risk scared them too.

I've been preaching this mantra ever since I left prop.
Prop is about stocks, not futures or options.
That is where the money is.
(for them).

 

[Agassi]

OK, I am going offshore..

I like the CFD's and can any one suggest how to get around this requirement? since it is illegal for U.S. residents?

 

[woodmancci69]

Couple of observations....If you've never traded futures give yourself atleast 6months to get beat up and thats if you've traded stocks if not atleast 9 months...secondly trading 1 lots of the minis is ok to start but in order to be profitable trade atleast 3..commissions and order entry system gets expensive...also its very easy to overtrade and theres tons of noise..lastly if you can become consistent then raise your size and the advantage is you can trade 25-50 contracts and really start printing it. focus on a couple of patterns or trades..Consistency is key..Good luck..

 

[4DTrader]

Quote from woodmancci69:

Couple of observations....If you've never traded futures give yourself atleast 6months to get beat up and thats if you've traded stocks if not atleast 9 months...secondly trading 1 lots of the minis is ok to start but in order to be profitable trade atleast 3..commissions and order entry system gets expensive...also its very easy to overtrade and theres tons of noise..lastly if you can become consistent then raise your size and the advantage is you can trade 25-50 contracts and really start printing it. focus on a couple of patterns or trades..Consistency is key..Good luck..

woodman,

do you know what moves the price of index futures, like NQ?
I know QQQQ moves with Q100 index, which in turn moves with the underlying 100 individual stocks. What exactly moves NQ? thanks.

 

[limitdown]

Quote from jammy page:

I agree that the increments of scaleability/leverage are much finer with stocks than with futures--with futures you're working with larger chunks of capital for each increment that you scale.

In other words, for say $50,000 in capital, daytrading futures you could work with a range of say 1-20 S&P e-mini contracts, and prop trading stocks you could work with a range of say 1-7,400 shares of SPY.

This is clearly a point in the favor of prop trading stocks. Again however, for me at least, it's not a huge one because, as shown in the example above, 20 increments of leverage for the e-minis is already a lot.

Anyone else care to chime in....like Don Bright??

I sat across from a guy on the prop trading desk who tried to specialize in the SPY doing just what was recommended, and trying to average some 2,000 shares per trade.

wonder what the results were?

well, so did I.....

he would not say, and we were replacing both his seat and mines....

he went off to other things, and I went on to bigger and better...., not that the story is based on me, but on his SPY experiences....

from what I remember, he had to take a position irrespective of the technicals on the more shorter time frames of 7mins, 5mins, 3mins or the immediate moves, and try to hold a position based on the 15min and longer time frames...

when he was able to do that, then he could either catch the trend or try to limit his losses....

so much for that as a reasonable alternative, trading the SPY was never as easy as it seems from the distance of looking at the charts....