Should You Day Trade Stocks or Futures Contracts?

It seems most of the articles I read in the article directories suggest day trading exchange listed stocks. This is a bit difficult for me to understand, as futures contracts offers some distinct advantages over trading stock issues. As a longtime trader, I have extensive experience trading both of these equity instruments and understand the way both function. Not that there’s anything wrong with trading stocks, as good money can easily be made trading stock issues. In my opinion, though, trading futures contracts, especially the e-mini contracts, have a multitude of individual advantages so as to make them a prohibitive favorite for day trading.

Needless to say, I can hear the stock day traders protesting loudly as many have been very successful in day trading their favorite stock. I can understand this, as a certain amount of money can certainly be earned in the stock business. However, the leverage to maximize your gains simply doesn’t exist in day trading stocks. Further, day trading stocks entails a significant capital outlay in order to get started. On the other hand, getting started in the futures trading business requires a far smaller outlay of cash and seems better suited for the smaller investor.

From the onset, though, any futures day trader realizes that the high level of leverage that futures trading involves will maximize your profit; but it’s also important to realize that high levels of leverage can also maximize your loss. For that reason alone it is important to practice and learn sound money management practices when trading futures. Contrary to popular belief, trading futures is not like going to the casino. There are very specific methodologies that must be learned and employed in order to be successful trading futures. To be sure, it is my belief that many beginning and poorly trained futures traders habitually over trade their accounts and take unnecessary risks in their trading activities. This approach is a sure way to deplete your futures trading account.

While some stocks can be fairly active, there activity pales in comparison to the financial index e-mini futures contracts. This healthy activity in the financial index e-mini contracts makes them a popular and profitable equity instrument to trade. And traders have flocked to the e-mini contract in droves. To be sure, the ES e-mini contract is the fastest growing financial instrument in the short history of futures contract trading. Currently the average volume on the ES contract has consistently exceeded 1.4 million contracts per day. That is to say, there are no liquidity problems in the e-mini marketplace.

In my trading activities, I trade the financial indexes in the futures market. I do this because all of my prior experience in trading has been centered in the financial arena. There are scads of other e mini contracts to trade, but I have found the financial indexes fit well in my trading plan. Further, I do not employ any fundamental analysis when trading the e-mini contracts. I am a scalper, and find scalping among the most effective methodologies for day trading the e-mini contract.

On the other hand, day trading stocks is a different proposition. While some technical analysis can be employed to trade stocks, there is a healthy amount of fundamental analysis that goes hand-in-hand with trading stocks. For intraday trading, fundamental analysis can be a difficult road to hoe. Many stock day traders may have to wait several days before their analysis results in their fundamental expectations.

As a scalper, I have no trades to hold overnight, and every night at bedtime all of my money is in cash. I can be an impatient person, and detest trying to de-cipher, or predict, which way the market may move. As a scalper I spend no time predicting market moves; I react to what the market is offering and exploit breakouts and breakdowns as they occur on the chart. I find that simply trading the chart in front of me greatly reduces my market risk as my investment horizon is usually between 10 and 15 minutes. I would contrast that to the stock day trader who may wait days before his plans come to fruition.

Of course, when trading futures contracts we run very tight stops to minimize downside risk and try to let our winning trades run. This is often easier said than done, but with practice you can become quite proficient in this technique. In short, scalping allows me to minimize downside risk and take advantage of significant market moves as they present themselves. I spend no time waiting for the market to move in my desired direction, I spend my time discerning potential movement in the market as the chart formation indicates. No, I am not much on predicting the market; I spend my time reacting to the market and hence reduce my potential risk exposure to a very narrow time band.

Especially for beginning traders, I highly recommend learning the scalping method as a way to profit in the market. It does take some time and practice, but the learning curve is not a prohibitably difficult one and I have had many traders find success in as short as 2 to 3 months. It is my opinion that scalping futures contracts is a superior method to trade. Most traders tend to graduate from scalping and move into swing trading or longer-term trading techniques. As for me, I have spent the last 25 years scalping and have no desire to graduate to swing trading. I suppose I am stuck with the simple elegance and efficiency of trading e-mini contracts. Additionally, I covet the peace of mind I receive by not holding trades overnight or committing myself to a certain direction of the market in order to profit.

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About the Author:
I am a long time institutional and retail trader. I still trade every day, but usually only from 6 AM to lunch break. After so many years of trading, I take pleasure in sharing some of the knowledge I have acquired in sharing it with those in the early stages of their trading career. You can learn to trade in a system that works, because I trade the same system every day that I teach. I encourage you to visit my site and sign up for the free nightly videos(a $500 value) where I share some of the techniques I have used to make me so successful. This is a great offer for new traders and intermediate traders who are not having the class success they expected. Click here to start receiving your informational and fact filled videos every night.
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Stock Assault 2.0 Automated Stock Picking Software

Investors who find out about Stock Assault 2.0, the so-called artificial intelligence software that supposedly picks out which stocks in which to invest are often justifiably skeptical because of the seemingly glowing claims that are made about it.

Click Here to read the detailed review of Stock Assault 2.0

Despite the reality that investing in the stock market involves risks, because of the fact that stock prices rise and fall, it is, of course, theoretically possible to make money by buying stocks when the prices are low and selling at a high plateau before they fall. It is for this reason that Stock Assault 2.0 was created, to assist would-be investors in picking stocks that are about to rise in value and then to sell them at the right time before their value goes down. Of course, the success or failure depends not only on having the right stocks in a portfolio, but knowing when to make trades.

The means by which Stock Assault 2.0 was designed to succeed is by harnessing the extraordinary speed and power of a computer to perform calculations, comparing and charting stock prices at many times faster than any human brain would be capable of doing. Developed by 25 cream of the crop day traders, Stock Assault software took three million dollars and five years to create. Running the program is like having a thousand expert day traders giving proficient advice on what to buy, and when to sell it.

Click Here to read the detailed review of Stock Assault 2.0

According to its promoters, the software can be used to earn an annual return on investment as high as 13,000%. If someone were to start out with a minimal capital outlay of $500, their annual return would be $65,000 even if some profits were taken out after each trade. The developers say the program is so easy to use, people do not even need to have any previous knowledge or experience of how to trade stocks.

It is only common sense for market investors to form the opinion that if something sounds too good to be true it probably is. To overcome this logical resistance, Stock Assault 2.0 is sold with what appears to be an excellent guarantee. Within 60-days of purchase, someone who is not satisfied with the software can return it for a 100% refund of their purchase price.

Because very few people are willing to shell out their hard earned money sight unseen for a stock picking program, even if it promises to deliver excellent returns on one’s investment, anyone who is considering to buy Stock Assault 2.0 is invited to download a free demo version of the software so they can try it out for themselves and receive an impression of what the program does and how it works ahead of time.

Click Here to read the detailed review of Stock Assault 2.0

 

 

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