Futures Vs. Stocks: Why Choose The First?

Deciding between whether to trade futures or stocks? While there are pros and cons to both, the most suitable option for you will largely depend on your risk profile. In this article, we give you a comparison of futures vs. stocks as well as some good reasons you should opt for the former.

Low Commissions and Execution Costs

Depending on your broker, you may be charged a different commission rate than other traders. However, you can expect the total commission to be as low as 0.5% of the contract value. This can vary based on the service provided by your broker. Commissions are usually payable when the position is closed.

Futures Provide You with More Leverage

When futures trading, the trader has to put in a margin, which is a percentage of the contract value. In the case that the market moves in the opposite direction, the trader will incur losses that may be higher than the margin amount, and they have to pay to bring this value closer to a maintenance level. However, if the market moves in the right direction, the profits you stand to make are also much higher. Because futures trading allows investors to be exposed to a much larger volume of stocks than buying them directly, you will benefit from more leverage.

Futures Markets Provide High Liquidity

A large number of futures are being traded every day and some markets are even open round the clock. The high level of trade activity ensures that market orders can be placed quickly, which in turn means that prices do not tend to fluctuate drastically. This allows traders to clear out large positions quickly without any adverse effects on price.

Futures Markets Are Fairer and Unconducive to Insider Trading

Unlike stocks where certain individuals may have access to insider information which they then leak to an exclusive group of traders, it is very difficult to do the same in a futures market. This allows the market to be more efficient and gives all traders a fairer chance instead of having a select group of individuals with an advantage over others.

Bold Analysis Has Got the Futures Trading Resources You Require

If you are looking for futures trading resources to inform your trading decisions, you have come to the right place at Bold Analysis, LLC. We are able to offer digital mentorships, 1-on-1 coaching, support for beginner traders and so much more. With 24/7 admin support and a member chat forum available, you can have access to the help you require at all times and connect with like-minded individuals who are on the same trading journey when you make use of our services. If you have any questions at all or would like to get started by opening a live account today, please do not hesitate to contact us and one of our experienced consultants will be in touch as soon as possible.