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I trade futures as opposed to stocks for several reasons. First, leverage.
Futures such as the D-Mark are leveraged almost 94 : 1 ( margin to for 1
contract of $125,000 worth of d-marks is $1,330 ) .
Second, is ease of trading. For example, there is no up-tick rule to sell
short. And there are other complications that can exist when wanting to
short stock that do not exist with futures short sales. Third is speed of
execution. When I trade the S&P, from the time I hit my speed dial to the
time I receive my confirmation is usually around 25 seconds. Also not being
able to get through to a broker, a situation that happens often for stock
investors on high volume "crash" days, is something that simply does not
happen with futures brokers ( not in my experience ). Fourth, stocks do not
exhibit the same degree of trend independence that futures do. Most stocks
trends tend to correlate very highly with one or all of the major indexes.
In other words a chart of Intel will most likely resemble a chart of
Microsoft. I have seen studies that indicate that up to 70% of a stocks
movement is "derived" from the direction of the overall market. With
futures this tends to less true. Live cattle has no correlation with crude
oil, for example. This allows a much higher degree of diversification.
Lastly, I believe the open-outcry method of price discovery is a much more
legitimate method of determining price than the specialist method. I am not
interested in the orderly market that the specialist system tries to
achieve. I love volatility.
All of the above is my opinion.
All the Best !
Bill shumake
-----Original Message-----
From: w.murray <w.murray@xxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Monday, December 29, 1997 9:24 PM
Subject: Stocks vs Commodities
>I would appreciate your opinion on why you trade stocks vs commodities or
>vice versa. Also if you trade options, or dont trade options, on stocks, or
>commodities, please indicate your reasoning for this stategy also. Thanks.
>
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