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

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
 
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
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That was my reaction as well. Scared money never wins.
 
Quote from jammy page:

After considering trading prop for some time now, I don't understand what the real appeal is given that you can retail daytrade futures with basically the same 20:1 margin that the average prop firm will only give you under very limited conditions AND if your trade fits within their strict risk parameters?

Also, trading futures retail you would seem to get a much better deal on commissions than the starting commissions rate that I hear is standard for the more respected prop firms.

Also, no silly series 7 licensing requirement needed to retail trade futures.

Also, much more favorable 60/40 tax treatment for futures than for most stocks (although some ETFs may qualify for the same treatment).

Finally, I am very mindful of the fact that at least 75% of the average individual stock price movement is determined by the overall market, and that you can trade the overall market movement with futures.

So what am I missing?

(I know there are some pseudo-market-making, "opening order" and other strategies that are unique to stock trading, but I don't see myself really getting into those anyway. Also, I'm not really looking for someone to train me or let me in on their "winning strategies," and I certainly don't want a big brother monitoring mine.)

Thanks for your thoughts.

Jimmy P.
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I agree with you totally. There are many advantages to trading futures. Yes, they can be risky if you overtrade or are undisciplined. Personally I would never use anywhere near 20:1 leverage. At the same time, they are less volatile than individual stocks and not as vulnerable to surprise announcements, etc. Also, it is more straight forward to use stops or more advanced orders like OCO.
 
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
More...

Right, and how much money are you willing to put up to continue funding your education in learning how to trade the "hard" markets?

Stocks compared to currencies (even stock index futures) are completely different animals; knowing how to trade the euro or yen properly will not prepare you for trading GOOG or RIMM. Even knowing how to trade GOOG will not prepare you for trading say MSFT.

Oh, and while I'm raining on your parade, here's another big difference between stocks and futures: leverage. Just think, in futures or currencies, you are always a single trade away from a blowout, that's just how much rope they give you.

I suspect it would be pretty hard for me to lose 100K in stocks in a single day, even on purpose, even with 4-1 leverage; but I KNOW I can lose 100K and lots more in one day trading currency or metal futures. Always keep that in mind, no matter how "good" you eventually become.
 
The main (non-mini) contract Crude Oil Futures: 1,000 bbl. contract at approx. $103/bbl. is a contract value of $103,000.


I only know of firms charging just under $8,000 margin to trade this contract.


This is 13 to 1 / not 20 to 1.


OP - do you know of any reputable firms that are requiring less than $5,000 margin to trade the main Crude Oil Futures Contract?

Just to be clear, the April '08 contract.
 
another advantage of stocks
is that as a trader you can compete against investors...

have you ever seen an investor in index or in oil futures?
well, not many...
 
Let me weigh-in here having done both prop and retail futures:
1) they have similarities when it comes to risk management (prudent use of stops) and money management (bet sizing).

2) ample and even excessive leverage is available for both
(see $500 margins for some emini futures contracts !)

3) Futures should be traded with a systematic bend whereas on the prop side with individual stocks, especially the "high flyers", require finely honed discretionary, chart-reading techniques.

4) Prop has this major problem:
PRESSURE-TO-TRADE.
This alone can kill many newbie traders
Commissions are base on volume.....that makes it tough.

5) Prop also has this problem:
the software out there to support many multiple stock positions is not that great...it's easy to lose your shirt if you forget to place a stoploss order, etc.
The order entry software does not perform "due-diligence" and let's you trade with abandon for the most part. There's no practical "intelligence" to the software....it sucks.
I remember my first trading platform was Lightspeed....and there were no stop orders supported....and each trader had to monitor the other's positions when they went to the men's room.
 
JP,

I agree with having traded both and now only trade ES. However, this is not a market for amateurs and newbees--the pros will chew those folks up and spit them out.

In many instances, equities are much more forgiving, albeit less profitable, which is to say, a new trader won't lose his money as fast in equities as futures. But make no mistake, the sharpies will eat the newbees lunch whatever the instrument traded, especially FOREX.
 
Quote from illiquid:



I suspect it would be pretty hard for me to lose 100K in stocks in a single day, even on purpose, even with 4-1 leverage; but I KNOW I can lose 100K and lots more in one day trading currency or metal futures. Always keep that in mind, no matter how "good" you eventually become.
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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.
 
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.
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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.
 
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