3 Reasons Why Trading Futures Is Better Than Stocks

as someone who's traded stocks for the majority of my trading career I was a little skeptical of getting into Futures and they always felt a little scary they felt like they were something that's for the big boys or for someone who's had a lot more experience and it couldn't be farther from the truth I think a lot of us we tend to stick to what we know and that could be a good thing at times but sometimes we simply just don't know what we're missing and potentially can be missing out on a whole different world of trading Vehicles that's why in today's video we're going to be covering three reasons why Futures Trading is better than trading stocks so let's get right into it number one is the trading hours if you need another reason to stay up all night stressing about money Futures has certainly got you covered jumping over to CME group's website you can see that for example if you were to trade the S&P 500 futures you can begin trading them Sunday at 6:00 p.m. Eastern and you will be able to trade them essentially all the way through Friday at 5:00 p.m. eastern time now there is a daily maintenance period from 5: to 6:00 p.m. so just make sure you're aware of that where there's a 1 hour of the day where you can take a sigh of relief take a break recharge and get ready to go back to war that's something you will have but things will pick right back up where they left off so make sure you're ready for it no but in all seriousness though the reason why this is actually a positive is because there's no pre-market hours there's no after hours it's just you know trading hours like you can trade and technically it is pre-market and after hours for stocks and for the overall markets but the Futures contracts will will actually trade now not everything will trade the exact same time so for the most part through CME Group if you're trading a product offered through them you're going to have hours that look something like this why is that better than stocks well if we have news events in the pre-market for example CPI reports and we have potential reactions overnight or if we have news overseas news in other countries where maybe their start their day starts at a different time where you have different opens in the Asian open or over in Europe and these markets open at different times well you'll get reactions and you'll potentially have trading opportunities that you can take advantage of through there and if you trade stocks or if you trade options specifically well options you can't trade those until 9:30 a.m. eastern time all the way until 4 P p.m. and then it cuts off you'll have to wait now technically there's a 15-minute you know period after the close for some select tickers some select ETFs but for the most part you don't have access to doing anything in these overnight sessions and maybe you want to trade the overnight session for crude oil or for the S&P or the NASDAQ and you find that there's good opportunities there well now you have full access to that for me I can sleep beautifully at night knowing that my stop loss and takeprofit are set and whatever happens happens the trade is the trade I'm not going to sit there wake up and check Futures and have to worry all night and that's something that I used to do especially when just trading stocks but if I'm in a future position I don't care I just go to bed and it is what it is all right number two is Leverage if you want to way to blow three accounts in less than one week well Futures my friends is absolutely for you there really two parts in this higher leverage and the first is lower starting costs you could in theory open a brokerage account with a very small amount of money we're talking 50 bucks $100 maybe even a little bit more and potentially even less if you really wanted to depending upon the rules of the broker and you could technically start trading the micro e mini futures for let's say the S&P the NASDAQ the Dow the Russell and you could get access to these markets for a very low startup cost the next piece to this is there is no PDT Rule and so when we're talking leverage you can trade these markets and be able to actually make money not talking about a couple cents like you can get in and trade the micro Minis and you know with a decent Siz move in the S&P you can make $50 $100 on a trade for just one contract it's not that insane of a move that you need for those things to occur let alone if a swing trade but you also don't have to abide by the PDT rule the pattern day trade Rule and when it comes to the PDT rule that holds a lot of people back when they're starting out because they only get three day trades per five days and when you don't have to worry about that if you know what you're doing and you have a lot of trade opportunities in a given day based on your strategy well you could trade six seven 8 nine 10 times in a week you can day trade that many times in a week and if you do that or or more maybe right and if you do that and you're profitable well it allows you to scale up much faster right because you're not having to wait and let cash settle and this and that you can kind of get right back at it and trade again problem with that though is that most people are not profitable and so that ends up becoming more of a problem because they keep trading trading trading and losing money and then blow three accounts in a week and I mean we've been there many of us and potentially done that that's obviously not what we're telling talking about here we don't want to do that number three this is less sexy but it is taxes there are major benefits to trading Futures versus stocks or versus options if you're profitable check the door the IRS might be here but no seriously when it comes to taxes there's something called the 6040 rule 60% of your gains when you trade Futures are taxed at the long-term capital gains tax rate 40% are taxed at the short-term capital gains tax rate now short-term capital gains tax rate is essentially your ordinary income tax rate so it will just get factored into your taxes and if you've made you know whatever you made it all gets kind of factored in I'm not a tax professional but to my understanding it all gets factored in and then whatever tax bracket you fall into boom however there's long-term capital gains where if you hold positions for over a year and then you take profits you pay a long-term capital gains tax rate which is usually lower than your ordinary income tax rates especially especially if you are a high income earner or you earn six figures or more you're very likely going to save on taxes if you're getting taxed at a long-term capital gains tax rate those rates are generally lower than your ordinary income tax rates especially as you make more money now does this mean that I never trade stocks absolutely not I still trade stocks a lot but there is a time and a place and if I'm trading stocks and I'm trading SPY it actually makes no sense why would I trade spy when I can go trade the S&P futures micro e minis or the mini Futures why would I go trade spy why would I go trade QQQ why would I go trade iwm so that's just a way that I like to think about things these days and it's definitely been a piece that I've added to the Arsenal especially when it comes to other markets like Bitcoin like crude oil uh gold and silver as well so these are things that I add to the Arsenal and I use them in my own trading personally and I would highly recommend you start thinking about Futures if you traded any of the things I just mentioned a second ago I'll see you guys in the next one peace

Channel: TC Trading

Views: 1,278

Keywords: TC Trading, Trading Tutorials, Trading, Futures Trading, understanding futures contracts, futures trading strategies, futures trading for beginners, futures market analysis, futures trading platforms review, futures trading tutorial, futures trading examples, futures trading psychology, futures trading risk management, futures trading indicators, futures trading tips and tricks, futures trading vs. options trading, futures trading education, futures trading trends and patterns

Id: HA1L0ynWPQQ

Length: 7min 11sec (431 seconds)

Published: Mon Apr 08 2024