Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

mangolassi

Futures Vs. Stocks - Trying to Decide What to Learn for Day Trading

Recommended Posts

Hi all,

 

I am looking to start seriously paper day trading either stocks or futures (I have dabbled here and there). Now, my eventual goal is to learn and go live with whatever I am papertrading (whether it be stocks or futures). I have been reading technical analysis and trading psychology books, and have most recently been going through Al Brooks' books on price action trading.

 

I want something that I can be successful on at a lower timeframe (such as 5 minutes) for day trading, and something that follows the principles of price action in a reliable way.

 

I have some questions for those of you who have had experience with either stocks, futures, or both.

 

1) I have heard that the futures day trading market is for "professionals only". Is there any truth to this? When you compare futures to stocks, is any one market in particular more or less difficult for beginners to learn from?

 

2) I have just started trying out Lightspeed Trader, and so far I love the platform. Really efficient for day trading stocks. Is there any similar platform for futures day trading?

 

3) Can someone give me a quick overview of the difference in futures and stocks with regard to volatility? It seems people argue both sides - some say that futures are more volatile, some say that stocks are more volatile.

 

4) Do different futures have their own "personality"? Basically, how easy is it to take a strategy from CL for example, and apply it to ES or NQ? In stock trading, it seems that the stocks behave very similarly (with regard to technicals), and you can apply strategies broadly. Is it the same with futures, or is that more difficult?

 

Thanks in advance for any replies.

Edited by mangolassi

Share this post


Link to post
Share on other sites

message too short make it at least 20 characters

 

Hi all,

 

I am looking to start seriously paper day trading either stocks or futures (I have dabbled here and there). Now, my eventual goal is to learn and go live with whatever I am papertrading (whether it be stocks or futures). I have been reading technical analysis and trading psychology books, and have most recently been going through Al Brooks' books on price action trading.

 

I want something that I can be successful on at a lower timeframe (such as 5 minutes) for day trading, and something that follows the principles of price action in a reliable way.

 

I have some questions for those of you who have had experience with either stocks, futures, or both.

 

1) I have heard that the futures day trading market is for "professionals only". Is there any truth to this? When you compare futures to stocks, is any one market in particular more or less difficult for beginners to learn from? Trial them both... Which one is best depends on YOU. Your proclivities, inclinations, talents, feel, methods... You are a sample of one

 

2) I have just started trying out Lightspeed Trader, and so far I love the platform. Really efficient for day trading stocks. Is there any similar platform for futures day trading?

Trial the top three or four futures platforms... for the one that fits you.

 

3) Can someone give me a quick overview of the difference in futures and stocks with regard to volatility? It seems people argue both sides - some say that futures are more volatile, some say that stocks are more volatile. Instead of exploring differences in Volatility btwn... best to initially focus on differences in Leverage...

 

4) Do different futures have their own "personality"? Basically, how easy is it to take a strategy from CL for example, and apply it to ES or NQ? In stock trading, it seems that the stocks behave very similarly (with regard to technicals), and you can apply strategies broadly. Is it the same with futures, or is that more difficult? Different futures do have different 'personalities' but your own perceptual acuities or lack of them, the method, system being applied, etc. may dull / shroud those differences. Across time I learned I can make all futures "behave very similarly" by using different chart time frames for each one ... hth

 

Thanks in advance for any replies.

Share this post


Link to post
Share on other sites
Hi all,

 

I am looking to start seriously paper day trading either stocks or futures (I have dabbled here and there). Now, my eventual goal is to learn and go live with whatever I am papertrading (whether it be stocks or futures). I have been reading technical analysis and trading psychology books, and have most recently been going through Al Brooks' books on price action trading.

 

If you are studying Al Brooks, you may also want to explore Bob Volman. Both authors offer up good information concerning price action. Bob Volman is easier to read and understand (personal opinion).

 

If you learn to trade price action, you can trade anything...

 

Some stocks are more volatile than others, as some futures markets are more volatile than others. Exploring markets to find a proper fit for yourself will take some time, but I would focus my learning on trading the less volatile vehicles as a beginner.

 

Day trading stocks will require a much larger account balance (25K minimum, but you will need much more than that). Shorting stocks is more difficult than shorting futures. There is also a tax advantage with trading futures.

 

I've traded both... my preference is futures.

Share this post


Link to post
Share on other sites

Thanks for the help.

 

Are there any particular reasons why shorting stocks is more difficult?

 

Do you think the ES is too volatile to start observing/paper trading with? Since Al Brooks uses it primarily as an example in his price action books, I have been noting down my observations on the 5 min chart starting at 9:30 in the morning, just seeing how the thing behaves and moves. It seems like the perfect day trading market to get into, since it has amazing intraday trends, breakouts, etc. When I look at NQ or YM, it seems that these guys are really too slow for day trading. Haven't really looked into CL (yet).

 

Which brokers should I look into? I have been using NinjaTrader with a demo from AMP, and I like the NT platform.

 

If I eventually want to get into automated trading, are there some advantages/disadvantages to the various platforms?

 

Sorry for all the questions, and thanks for helping me out.

Share this post


Link to post
Share on other sites
Thanks for the help.

 

Are there any particular reasons why shorting stocks is more difficult?

 

Do you think the ES is too volatile to start observing/paper trading with? Since Al Brooks uses it primarily as an example in his price action books, I have been noting down my observations on the 5 min chart starting at 9:30 in the morning, just seeing how the thing behaves and moves. It seems like the perfect day trading market to get into, since it has amazing intraday trends, breakouts, etc. When I look at NQ or YM, it seems that these guys are really too slow for day trading. Haven't really looked into CL (yet).

 

Which brokers should I look into? I have been using NinjaTrader with a demo from AMP, and I like the NT platform.

 

If I eventually want to get into automated trading, are there some advantages/disadvantages to the various platforms?

 

Sorry for all the questions, and thanks for helping me out.

 

Read up on the requirements and mechanism of shorting stock... you'll understand.

 

Successful day traders make money on the YM or NQ. It may be that you just don't recognize the opportunities as yet.

 

Look into all brokers. You don't know enough yet to pick apart trading platforms... NT is fine.

 

Automated trading... don't know.

Share this post


Link to post
Share on other sites

I am a big fan of stocks so i would say stocks. I have seen traders make more money in stocks than in futures. This is my general observation and may vary for other people.

Share this post


Link to post
Share on other sites

So I opened up a Ninjatrader account this past week. Now I'm getting ready to fund it. I think in a couple of weeks I'll fund, and until then I'm just sim trading and documenting my progress on an excel spreadsheet.

 

When I go live, I think I'm going to start very small just to practice 1 contract on the ES. Do you guys think putting $6,000 is OK just to try and break even and practice? For ES, Ninjatrader requires $5060 initial, and $4600 maintenance.

 

At this point, I am more concerned with learning to manage my trades and not over-trade. I have been backtesting and sim trading two strategies that I worked out from Al Brooks' price action books, and so far it's been working out well on the indexes. With these strategies I am just trying to scalp 1 point from the market per trade during trends, and with 1 contract and the stop loss I typically place, my losses likely won't exceed $100 per any given day. For the first month or so, if I can enter trades that fit my strategies, and learn to manage my stop losses and profit targets, if I can just break even I'll be more than happy with that progress. Then I guess I can fund more money and work up to 2 contracts so that I can swing half of my position for more profits after scalping a point from the first half.

Share this post


Link to post
Share on other sites

At the risk of repeating ourselves, it's important to note that futures trading is not for everyone. You can invest in the futures market in a number of different ways, but before taking the plunge, you must be sure of the amount of risk you're willing to take. As a futures trader, you should have a solid understanding of how the market and contracts function. You'll also need to determine how much time, attention, and research you can dedicate to the investment.

 

As an investor, you can trade your own account without the aid or advice of a broker. This involves the most risk because you become responsible for managing funds, ordering trades, maintaining margins, acquiring research and coming up with your own analysis of how the market will move in relation to the commodity in which you've invested. It requires time and complete attention to the market.

 

Another way to participate in the market is by opening a managed account, similar to an equity account. Your broker would have the power to trade on your behalf, following conditions agreed upon when the account was opened. This method could lessen your financial risk because a professional would be making informed decisions on your behalf. However, you would still be responsible for any losses incurred as well as for margin calls. And you'd probably have to pay an extra management fee.

 

A third way to enter the market, and one that offers the smallest risk, is to join a commodity pool. Like a mutual fund, the commodity pool is a group of commodities which can be invested in. No one person has an individual account; funds are combined with others and traded as one. The profits and losses are directly proportionate to the amount of money invested. By entering a commodity pool, you also gain the opportunity to invest in diverse types of commodities. You are also not subject to margin calls. However, it is essential that the pool be managed by a skilled broker, because the risks of the futures market are still present in the commodity pool.

Share this post


Link to post
Share on other sites

Whether a trader decides to use stand-alone options, stock futures, or a combination of the two requires an assessment of individual expectations and investment goals.

 

One of the first questions an investor must ask is how much risk they are willing to take on in their investment strategies. Option trading provides less upfront risk for buyers given the lack of obligation to exercise the contract. This provides a more conservative approach, particularly if traders use a number of additional strategies like bull call and put spreads to improve the odds of trading success over the long term.

Share this post


Link to post
Share on other sites

There are some definite differences between trading stocks and tradingfutures. ... A company value is reflected in its stock price and commodity futures values are derived from the underlying price of the commodity: A stock is simply a partial ownership of a company. The value of the stock is reflected in its price.

Share this post


Link to post
Share on other sites

Most of the time, futures open at a much different price than where they closed the previous day. Price volatility means that the chances of unexpected losses or profits rise when positions remain on the books at the end of a trading session.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Date: 4th April 2025.   USDJPY Falls to 25-Week Low as Safe Havens Surge and Markets Eye NFP Data.   Safe haven currencies and the traditional alternative to the US Dollar continue to increase in value while the Dollar declines. Investors traditionally opt to invest in the Japanese Yen and Swiss Franc at times of uncertainty and when they wish to avoid the Dollar. The Japanese Yen continues to be the best-performing currency of the week and of the day. Will this continue to be the case after today’s US employment figures?   USDJPY - NFP Data And Trade Negotiations The USDJPY is currently trading at a 25-week low and is witnessing one of its strongest declines this week. The exchange rate is no longer obtaining indications from the RSI that the price is oversold. The current bullish swing is obtaining indications of divergence as the price fails to form a higher high. Therefore, short-term momentum is in favour of the US Dollar, but there are still signs the Japanese Yen can regain momentum quickly.       USDJPY 1-Hour Chart     The price movement of the exchange rate in both the short and long term will depend on 3 factors. Today’s US employment data, next week’s inflation rate and most importantly the progress of negotiations between the US and trade partners. If today’s Unemployment Rate increases above 4.1%, the reading will be the highest seen so far in 2025. Currently, the market expects the Unemployment Rate to remain at 4.1% and the Non-Farm Payroll Change to add 137,000 jobs. The average NFP reading this year so far has been 194,000.   If data does not meet expectations, US investors may continue to increase exposure away from the Dollar and to other safe-haven assets. Previously investors were expecting only 2 rate cuts this year from the Federal Reserve, however, most investors now expect up to 4. If today’s employment data deteriorates, economists advise the Federal Reserve may opt to cut interest rates sooner.   Therefore, it is important to note that today’s NFP will influence the USDJPY to a large extent. Whereas in the longer-term, trade negotiations will steal the spotlight. If trade partners are able to negotiate the US Dollar can correct back upwards. Whereas, if other countries retaliate and do not negotiate the US Dollar will remain weak.   USDJPY - The Yen and the Bank of Japan The Japanese Yen is the best-performing currency in 2025 increasing by 6.70% so far. Risk indicators such as the VIX and High-Low Indexes continue to worsen which is positive for the JPY as a safe haven currency.   Yesterday Japan released March business activity data that came in weaker than expected: the Services PMI dropped from 53.7 to 50.0, while the Composite PMI fell from 52.0 to 48.9. The data is the lowest in two years. These figures could hinder further interest rate hikes by the Bank of Japan. However, most economists still expect the Bank Of Japan to hike at least once more. It's also important to note, that even if the BOJ opts for a prolonged pause, a cut is not likely.   Additionally, a 24% tariff was imposed on Japanese exports to the US yesterday. Prime Minister Mr Ishiba expressed disappointment over Japan's failure to secure a tariff exemption and pledged support measures to help domestic industries manage the impact.   Key Takeaway Points: US Dollar Weakens, Safe Havens Rise: The Japanese Yen and Swiss Franc continue to gain as investors shift away from the US Dollar. USDJPY Under Pressure: USDJPY trades at a 25-week low, with short-term momentum favouring the Dollar but long-term trends pointing to potential Yen strength. NFP and Unemployment Crucial: Today’s Non-Farm Payrolls and unemployment figures will heavily influence short-term USDJPY. On the other hand, trade negotiations will dictate longer-term trends. Japan Faces Mixed Signals: Despite weak PMI data and new US tariffs, the Japanese Yen remains strong. Economists expect at least one more rate hike from the Bank of Japan, but no cuts are in sight. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Michalis Efthymiou HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • YUM Yum Brands stock, nice breakout with volume +34.5%, from Stocks to Watch at https://stockconsultant.com/?YUM
    • Date: 3rd April 2025.   Gold Prices Pull Back After Record High as Traders Eye Trump’s Tariffs.   Key Takeaways:   Gold prices retreated after hitting a record high of $3,167.57 per ounce due to profit-taking. President Trump announced a 10% baseline tariff on all US imports, escalating trade tensions. Gold remains exempt from reciprocal tariffs, reinforcing its safe-haven appeal. Investors await US non-farm payroll data for further market direction. Fed rate cut bets and weaker US Treasury yields underpin gold’s bullish outlook. Gold Prices Retreat from Record Highs Amid Profit-Taking Gold prices saw a pullback on Thursday as traders opted to take profits following a historic surge. Spot gold declined 0.4% to $3,122.10 per ounce as of 0710 GMT, retreating from its fresh all-time high of $3,167.57. Meanwhile, US gold futures slipped 0.7% to $3,145.00 per ounce, reflecting broader market uncertainty over economic and geopolitical developments.   The recent rally was largely fueled by concerns over escalating trade tensions after President Donald Trump unveiled sweeping new import tariffs. The 10% baseline tariff on all goods entering the US further deepened the global trade conflict, intensifying investor demand for safe-haven assets like gold. However, as traders locked in gains from the surge, prices saw a modest retracement.   Trump’s Tariffs and Their Market Implications On Wednesday, Trump introduced a sweeping tariff policy imposing a 10% baseline duty on all imports, with significantly higher tariffs on select nations. While this move was aimed at bolstering domestic manufacturing, it sent shockwaves across global markets, fueling inflation concerns and heightening trade war fears.   Gold’s Role Amid Trade War Escalations Despite the widespread tariff measures, the White House clarified that reciprocal tariffs do not apply to gold, energy, and ‘certain minerals that are not available in the US’. This exemption suggests that central banks and institutional investors may continue favouring gold as a hedge against economic instability. One of the key factors supporting gold is the slowdown that these tariffs could cause in the US economy, which raises the likelihood of future Federal Reserve rate cuts. Gold is currently in a pure momentum trade. Market participants are on the sidelines and until we see a significant shakeout, this momentum could persist.   Impact on the US Dollar and Bond Yields Gold prices typically move inversely to the US dollar, and the latest developments have pushed the dollar to its weakest level since October 2024. Market participants are increasingly pricing in the possibility of a Fed rate cut, as the tariffs could weigh on economic growth.   Additionally, US Treasury yields have plummeted, reflecting growing recession fears. Lower bond yields reduce the opportunity cost of holding non-yielding assets like gold, making it a more attractive investment.         Technical Analysis: Key Levels to Watch Gold’s recent rally has pushed it into overbought territory, with the Relative Strength Index (RSI) above 70. This indicates a potential short-term pullback before the uptrend resumes. The immediate support level lies at $3,115, aligning with the Asian session low. A further decline could bring gold towards the $3,100 psychological level, which has previously acted as a strong support zone. Below this, the $3,076–$3,057 region represents a critical weekly support range where buyers may re-enter the market. In the event of a more significant correction, $3,000 stands as a major psychological floor.   On the upside, gold faces immediate resistance at $3,149. A break above this level could signal renewed bullish momentum, potentially leading to a retest of the record high at $3,167. If bullish momentum persists, the next target is the $3,200 psychological barrier, which could pave the way for further gains. Despite the recent pullback, the broader trend remains bullish, with dips likely to be viewed as buying opportunities.   Looking Ahead: Non-Farm Payrolls and Fed Policy Traders are closely monitoring Friday’s US non-farm payrolls (NFP) report, which could provide critical insights into the Federal Reserve’s next policy moves. A weaker-than-expected jobs report may strengthen expectations for an interest rate cut, further boosting gold prices.   Other key economic data releases, such as jobless claims and the ISM Services PMI, may also impact market sentiment in the short term. However, with rising geopolitical uncertainties, trade tensions, and a weakening US dollar, gold’s safe-haven appeal remains strong.   Conclusion: While short-term profit-taking may trigger minor corrections, gold’s long-term outlook remains bullish. As global trade tensions mount and the Federal Reserve leans toward a more accommodative stance, gold could see further gains in the months ahead.   Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Andria Pichidi HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • AMZN Amazon stock, nice buying at the 187.26 triple+ support area at https://stockconsultant.com/?AMZN
    • DELL Dell Technologies stock, good day moving higher off the 90.99 double support area, from Stocks to Watch at https://stockconsultant.com/?DELL
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.