Shadowtraders

Advantages of Futures Trading Over Stock Trading

What are the benefits of day trading futures?
One of the key benefits of daytrading futures is that we have the opportunity to trade pre-market trading (before 9:30 a.m. when the equity markets open in the USA). Mostly, you'll find futures traders who are active at that time, and we get a great head start on making our profit for the day.

Sure there is some limited pre-market stock trading, but generally it is pretty light. Overall, stock traders have to wait until 9:30 a.m. to get good fills without slippage (i.e., the difference between what you want to earn versus what you didn't not earn for your trades).

But if you are in the "market," ready to harness the power of day trading futures, today lets talk about 2 trading opportunities that can generate some pretty quick yet impressive returns, long before your fellow traders open up their trading platforms.

So How Can Futures Traders Have an Edge Over Stock Traders Day Trading Pre-Market?

Most economic reports are released at 8:30 a.m. EST or ETD. These reports are very cyclical, which is to say that they are released at the exact same time, on the same day, every month. This is definitely not something stock traders benefit from, since it is 8:30 a.m. and the market opens at 9:30 a.m.

There is one trade that I really like to make, that I make every month and it pays my mortgage payment in roughly 30 to 60 seconds. This news item comes out on the first Friday of every month at 8:30 a.m. from the Bureau of Labor Statistics. It is the unemployment report.

Literally thousands of contracts are traded in 30 to 60 seconds. Let me repeat, this is not a stock traders' game -- this is strictly a futures traders' game.

On that day, I like to the S&P500 emini.

There is no limit to the number of contracts I can trade at that time and I can get filled with no slippage. I get a nice $12.50 for each tick (price movement) that I make. With the unemployment report, I can usually go for a couple of points, not just ticks.

During those monthly 30 to 60 seconds, traders can trade different futures contracts because they all react to the unemployment report -- the emini S&P 500, the emini Nasdaq, the Dow Futures, even the treasuries and there is good currency trading as well. Each contract pays out different amounts, but all tend to move dramatically during the release.

A 'Treasury' Trove of Opportunity

As a futures trader, you must get used to the fact that there is an inverse relationship between the emini contracts and the treasury bonds.

If the news is good (the unemployment rate went down) -- then the emini S&P500, should all go up. And the 30-year bond and the 10-year note should go down.

With good news, the market buys stocks and sells treasury bonds. No problem for futures traders; we just enter short instead of entering long.

If the news is not good (the unemployment rate ticks up even higher) the 30-year bond and the 10-year note can fly higher," because institutions will flee toward treasury bonds as a safety net and exit their stock positions as quickly as they can.

When the news is bad, we want to buy Treasury contracts.

The Tricks of the Trade

So how will you know what direction the market goes on the first Friday? Of course, if you are not a futures trader, you may think, "Hmm, that is not possible to know," because you have to wait until Friday at 8:30 a.m. to discover it.

But here is the "insider" trick. On the Wednesday before, at 8:15 a.m., the ADP Non-Farm Employment Change Report is published. This is just for futures traders. This gives us a over view of what to expect on Friday morning. While the ADP report does not report government jobs, it is still a good bellwether of market direction.

And the ADP release, itself, is another good 30- to 60-second trade.

So, for the first trading week of every month, futures traders enjoy two hot trades -- each of which lasts from 30 to 60 seconds -- and can generally pay your mortgage, property tax and property insurance all at once!

Oh well, stock traders, better luck another time. ...

Barbara Cohen
CIO, Shadowtraders.com

Barbara Cohen – CIO, Shadowtraders, and professional day trader, specializes in teaching students how they can be trading futures with their own trading system and trading strategies. Ms. Cohen has helped hundreds of traders achieve their goals trading. Find out if trading futures is for you by attending one of Ms. Cohen's free webinars. Check out my Futures Trading Articles For more information, send an email to shadowsupport@shadowtraders.com or call 866-617-2037 today.

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Testimonials disclosure. Unique experiences and past performances do not guarantee future results! Testimonials herein are unsolicited and are non-representative of all clients; certain accounts may have worse performance than that indicated. Trading Futures involves substantial risk and there is always the potential for loss. Your trading results may vary. Because the risk factor is high in Futures trading, only genuine "risk" funds should be used in such trading. If you do not have the extra capital that you can afford to lose, you should not trade Futures. No "safe" trading system has ever been devised, and no one can guarantee profits or freedom from loss.

THIS INFORMATION IS PROVIDED FOR EDUCATIONAL/ INFORMATIONAL PURPOSES ONLY. These results are not indicative of, and have no bearing on, any individual results that may be attained by the using these indicators in the future.

PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. The example shown here may or may not be typical of the performance of this system and, ALTHOUGH WE BELIEVE THIS INFORMATION TO BE ACCURATE. Potential traders should carefully investigate, evaluate and compare trading strategies before investing capital. Some or all trading strategies may involve an inappropriate level of risk for potential traders. It is the nature of commodity and securities trading that where there is the opportunity for profit, there is also the risk of loss.

Trading strategies, like any other, may involve an inappropriate level of risk for prospective investors. THE RISK OF LOSS IN TRADING COMMODITY FUTURES AND OPTIONS CAN BE SUBSTANTIAL AND MAY NOT BE SUITABLE FOR ALL INVESTORS. Prior to purchasing or leasing a trading strategies from this or any other system vendor or investing in a trading strategies, investors need to carefully consider whether such trading is suitable for them in light of their own specific financial condition. In some cases, futures accounts are subject to substantial charges for commission, management, incentive or advisory fees. It may be necessary for accounts subject to these charges to make substantial trading profits to avoid depletion or exhaustion of their assets..

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