But why exactly should you be day trading stocks or futures?
Well, there are too many reasons to discuss in one sentence. Read on and find out the advantages of day trading stocks or futures now. First check out our Day Trading Software bundles designed for stocks and futures HERE.
Futures are Highly Leveraged Investments
Just like futures, options also provide you with enough exposure to the underlying stock during the validity date. But why trade futures instead of options?
Well, the whole concept of futures revolves around its derivative contracts which promise three things: the purchase of the underlying stock, a strike price, and a margin.
Their margins give you the right to keep a fraction of the total amount just in case the market moves in a direction against you. This collateral is what protects investors from the possible losses they may take from futures contracts. And what is day trading futures if not for all that leverage?
Future Markets are Very Liquid
Since futures contracts are traded in bulk, their liquidity continues to increase daily.
So, is day trading futures worth it?
Yes of course. Day trading is all about making exchanges in a fast-paced environment and trying to generate profit within a single day. How would you do so if there’s a lack of buyers and sellers?
The good news is, futures markets have an abundant presence of traders. And because of this said liquidity, the prices of futures do not fluctuate drastically. Allowing you to clear large positions without adversely impacting the market’s prices.
Commissions and Execution Costs are Low in Futures
One of the greatest advantages of futures is their low maintenance qualities. This is why most traders prefer to do day trading futures for a living.
Not only are the commissions and execution costs low, but their payments are also delayed until the position is closed. This is according to the futures day trading rules.
Futures transaction costs have gotten lower in the past few years, making each contract easy to close. These costs commonly depend on the value of the contract, but may also be according to the broker’s level of service.
Stocks Transactions are Smooth and Continuous
Since stocks are one of the most popular investments in the trading market, they are highly fluid, abundant, and wanted by the general investing public.
What makes stocks so interesting to traders is the position they provide their owners. Purchasing a stock of a brand or company allows you to be a part of it, which other investments just can’t do.
And no matter when or where you trade, stocks are always in demand, which allows their transactions to be smooth. Not to mention that these trades are continuous due to the great fluctuations in their prices.
Stocks are a Diverse Trading Instrument
Diversification is a common strategy in trading. Its purpose is to lower a trader’s portfolio risk and provide a greater amount of stable returns.
Investing your money in different assets provides the possibility of a bigger generation of profit in comparison to investing it all in one type.
This is where stock investments come into play. Their major advantage is their diversification in the market. The values change independently of other investments, and they deliver large and rapid gains.
Once added to your portfolio, stocks will begin handling your risks and help you forecast your loss onto your other investments.
Stocks Have the Flexibility to Invest in Smaller Amounts
Most traders refuse to try investing in other securities because of skepticism and lack of budget.
Luckily with stocks, you can purchase small amounts and gain enough exposure and knowledge about the company/brand before investing greatly in it.
It’s more like dipping your feet into the ocean before going for a swim. This strategy prevents you from suffering a great loss or being completely unaware of your investments.
What makes it even better is that no matter the size of your investment, you still have equal rights and options when it comes to your shares.