Should You Day Trade Stocks Or Futures Contracts?

It seems most of the articles I read in the articlefinancial arena. There are scads of other e mini
directories suggest day trading exchange listedcontracts to trade, but I have found the financial
stocks. This is a bit difficult for me to understand, asindexes fit well in my trading plan. Further, I do not
futures contracts offers some distinct advantagesemploy any fundamental analysis when trading the
over trading stock issues. As a longtime trader, Ie-mini contracts. I am a scalper, and find scalping
have extensive experience trading both of theseamong the most effective methodologies for day
equity instruments and understand the way bothtrading the e-mini contract.
function. Not that there's anything wrong with tradingOn the other hand, day trading stocks is a different
stocks, as good money can easily be made tradingproposition. While some technical analysis can be
stock issues. In my opinion, though, trading futuresemployed to trade stocks, there is a healthy amount
contracts, especially the e-mini contracts, have aof fundamental analysis that goes hand-in-hand with
multitude of individual advantages so as to maketrading stocks. For intraday trading, fundamental
them a prohibitive favorite for day trading.analysis can be a difficult road to hoe. Many stock
Needless to say, I can hear the stock day tradersday traders may have to wait several days before
protesting loudly as many have been very successfultheir analysis results in their fundamental expectations.
in day trading their favorite stock. I can understandAs a scalper, I have no trades to hold overnight, and
this, as a certain amount of money can certainly beevery night at bedtime all of my money is in cash. I
earned in the stock business. However, the leveragecan be an impatient person, and detest trying to
to maximize your gains simply doesn't exist in dayde-cipher, or predict, which way the market may
trading stocks. Further, day trading stocks entails amove. As a scalper I spend no time predicting market
significant capital outlay in order to get started. Onmoves; I react to what the market is offering and
the other hand, getting started in the futures tradingexploit breakouts and breakdowns as they occur on
business requires a far smaller outlay of cash andthe chart. I find that simply trading the chart in front
seems better suited for the smaller investor.of me greatly reduces my market risk as my
From the onset, though, any futures day traderinvestment horizon is usually between 10 and 15
realizes that the high level of leverage that futuresminutes. I would contrast that to the stock day
trading involves will maximize your profit; but it's alsotrader who may wait days before his plans come to
important to realize that high levels of leverage canfruition.
also maximize your loss. For that reason alone it isOf course, when trading futures contracts we run
important to practice and learn sound moneyvery tight stops to minimize downside risk and try to
management practices when trading futures.let our winning trades run. This is often easier said
Contrary to popular belief, trading futures is not likethan done, but with practice you can become quite
going to the casino. There are very specificproficient in this technique. In short, scalping allows
methodologies that must be learned and employed inme to minimize downside risk and take advantage of
order to be successful trading futures. To be sure, itsignificant market moves as they present
is my belief that many beginning and poorly trainedthemselves. I spend no time waiting for the market
futures traders habitually over trade their accountsto move in my desired direction, I spend my time
and take unnecessary risks in their trading activities.discerning potential movement in the market as the
This approach is a sure way to deplete your futureschart formation indicates. No, I am not much on
trading account.predicting the market; I spend my time reacting to
While some stocks can be fairly active, there activitythe market and hence reduce my potential risk
pales in comparison to the financial index e-miniexposure to a very narrow time band.
futures contracts. This healthy activity in the financialEspecially for beginning traders, I highly recommend
index e-mini contracts makes them a popular andlearning the scalping method as a way to profit in the
profitable equity instrument to trade. And tradersmarket. It does take some time and practice, but the
have flocked to the e-mini contract in droves. To belearning curve is not a prohibitively difficult one and I
sure, the ES e-mini contract is the fastest growinghave had many traders find success in as short as 2
financial instrument in the short history of futuresto 3 months. It is my opinion that scalping futures
contract trading. Currently the average volume oncontracts is a superior method to trade. Most traders
the ES contract has consistently exceeded 1.4 milliontend to graduate from scalping and move into swing
contracts per day. That is to say, there are notrading or longer-term trading techniques. As for me,
liquidity problems in the e-mini marketplace.I have spent the last 25 years scalping and have no
In my trading activities, I trade the financial indexes indesire to graduate to swing trading. I suppose I am
the futures market. I do this because all of my priorstuck with the simple elegance and efficiency of
experience in trading has been centered in thetrading e-mini contracts.