playing field is not level. Specialists are not in business to lose money.(The Nasdaq stocks, however, trade electronically, eliminating these problems.)

Emini’s are traded electronically without a pit and without locals taking advantage of the spread. (The Maxi contracts are still in the pit, but the Eminis appear to be leading the Maxis now, so there doesn’t appear to be direct competition between scalpers of the Eminis and the locals in the Maxis pit.) It’s true that big Emini traders who

There are reasons why a day trader would prefer Eminis over day trading stocks, and vice versa. Here are a few major considerations.

The edge…

Stock trading can take advantage of the small and variable lag time between stocks and the futures. This can give a day trader who is trading stocks an edge, especially if he/she is a scalper. And, if you are trading a liquid stock which is highly correlated to the Dow or S&P500, it’s possible to latch on when a “buy program” hits the market.

This variable lag, however, explains why the Eminis often times give more accurate support and resistance levels than stock market indices or individual stocks. Since the stock index futures lead the stock market, they’re not constantly lagging behind, playing catch up, or over-shooting a leader’s path, as the stock market is. The Emini’s movements are more pure, reflecting supply and demand instantly and accurately.

The leverage and size…

Trading stocks allows you to use less leverage and reduce your trading size to a level that may be more comfortable for some traders.

Trading one contract in the Emini’s carries a hefty bit of leverage that some traders may not want. On the other hand, many traders prefer the futures leverage.

The liquidity…

If you are trading stocks, you may have noticed that many individual stocks are not very liquid, at least not liquid enough for the kind of defensive day trading I do. To use my crucial rule, “every trade starts out as a scalp until proven otherwise,” you have to trade something that is extremely liquid, or slippage will ruin you. However, if you are interested in trading stocks, there are some stocks that do have excellent liquidity.

The Eminis are one of the most liquid markets in the world, with very little slippage.

The professional competition…

The NYSE stocks trade in a pit with specialists taking advantage of the spread, scalping with minimal costs per trade, a huge advantage over the public. The playing field is not level. Specialists are not in business to lose money.(The Nasdaq stocks, however, trade electronically, eliminating these problems.)

Emini’s are traded electronically without a pit and without locals taking advantage of the spread. (The Maxi contracts are still in the pit, but the Eminis appear to be leading the Maxis now, so there doesn’t appear to be direct competition between scalpers of the Eminis and the locals in the Maxis pit.) It’s true that big Emini traders who o

p>This variable lag, however, explains why the Eminis often times give more accurate support and resistance levels than stock market indices or individual stocks. Since the stock index futures lead the stock market, they’re not constantly lagging behind, playing catch up, or over-shooting a leader’s path, as the stock market is. The Emini’s movements are more pure, reflecting supply and demand instantly and accurately.

The leverage and size…

Trading stocks allows you to use less leverage and reduce your trading size to a level that may be more comfortable for some traders.

Trading one contract in the Emini’s carries a hefty bit of leverage that some traders may not want. On the other hand, many traders prefer the futures leverage.

The liquidity…

If you are trading stocks, you may have noticed that many individual stocks are not very liquid, at least not liquid enough for the kind of defensive day trading I do. To use my crucial rule, “every trade starts out as a scalp until proven otherwise,” you have to trade something that is extremely liquid, or slippage will ruin you. However, if you are interested in trading stocks, there are some stocks that do have excellent liquidity.

The Eminis are one of the most liquid markets in the world, with very little slippage.

The professional competition…

The NYSE stocks trade in a pit with specialists taking advantage of the spread, scalping with minimal costs per trade, a huge advantage over the public. The playing field is not level. Specialists are not in business to lose money.(The Nasdaq stocks, however, trade electronically, eliminating these problems.)

Emini’s are traded electronically without a pit and without locals taking advantage of the spread. (The Maxi contracts are still in the pit, but the Eminis appear to be leading the Maxis now, so there doesn’t appear to be direct competition between scalpers of the Eminis and the locals in the Maxis pit.) It’s true that big Emini traders who

and reduce your trading size to a level that may be more comfortable for some traders.

Trading one contract in the Emini’s carries a hefty bit of leverage that some traders may not want. On the other hand, many traders prefer the futures leverage.

The liquidity…

If you are trading stocks, you may have noticed that many individual stocks are not very liquid, at least not liquid enough for the kind of defensive day trading I do. To use my crucial rule, “every trade starts out as a scalp until proven otherwise,” you have to trade something that is extremely liquid, or slippage will ruin you. However, if you are interested in trading stocks, there are some stocks that do have excellent liquidity.

The Eminis are one of the most liquid markets in the world, with very little slippage.

The professional competition…

The NYSE stocks trade in a pit with specialists taking advantage of the spread, scalping with minimal costs per trade, a huge advantage over the public. The playing field is not level. Specialists are not in business to lose money.(The Nasdaq stocks, however, trade electronically, eliminating these problems.)

Emini’s are traded electronically without a pit and without locals taking advantage of the spread. (The Maxi contracts are still in the pit, but the Eminis appear to be leading the Maxis now, so there doesn’t appear to be direct competition between scalpers of the Eminis and the locals in the Maxis pit.) It’s true that big Emini traders who

lp until proven otherwise,” you have to trade something that is extremely liquid, or slippage will ruin you. However, if you are interested in trading stocks, there are some stocks that do have excellent liquidity.

The Eminis are one of the most liquid markets in the world, with very little slippage.

The professional competition…

The NYSE stocks trade in a pit with specialists taking advantage of the spread, scalping with minimal costs per trade, a huge advantage over the public. The playing field is not level. Specialists are not in business to lose money.(The Nasdaq stocks, however, trade electronically, eliminating these problems.)

Emini’s are traded electronically without a pit and without locals taking advantage of the spread. (The Maxi contracts are still in the pit, but the Eminis appear to be leading the Maxis now, so there doesn’t appear to be direct competition between scalpers of the Eminis and the locals in the Maxis pit.) It’s true that big Emini traders who

playing field is not level. Specialists are not in business to lose money.(The Nasdaq stocks, however, trade electronically, eliminating these problems.)

Emini’s are traded electronically without a pit and without locals taking advantage of the spread. (The Maxi contracts are still in the pit, but the Eminis appear to be leading the Maxis now, so there doesn’t appear to be direct competition between scalpers of the Eminis and the locals in the Maxis pit.) It’s true that big Emini traders who own a seat on the exchange and trade “size” have a cost advantage, but by historic standards, their costs are not much lower than the “retail” traders. Any Emini trader can now trade a “round turn” (buy and sell combined) for $4.80 per contract. And retail costs have been dropping. They’ll probably continue to fall.

The ease and psychology of two-sided trading…

Stocks are a bit difficult to short due to the “up-tick” rule (which means a stock has to move up one tick before you can short it). And there is a view widely held by retail traders that shorting a stock is not the most “wholesome” thing a person can do. (But actually, short positions are “squeezed” in uptrends so they provide additional “fuel” for uptrends. After all, a price rally normally doesn’t stop until most of the buyers have bought and most of the shorts have been squeezed out. Take the shorts out of the equation and rallies are not as sustainable.)

Day trading the Eminis is not hindered by an up-tick rule. Going short is as easy as going long. And as far as I know, there’s no stigma attached to shorting the eminis. In fact, most professional stock index futures traders I’ve met prefer shorts over longs. Maybe it’s because the public is more comfortable making money on uptrends.

Preparation to trade…

Trading stocks doesn’t necessarily involve stock fundamentals. But stock fundamentals, including the stock’s “story,” can help determine whether you want to favor longs or shorts. For instance, if you’re trading the stock of a company that has just announced a cure for cancer, you might favor the long side. But you’ve got to dig and read excellent sources to find good fundamental stock info. And even if you’re not trading with stock fundamentals, you’ve still got to search hundreds of stock charts for technical setups and chart patterns. This can take hours per day.

Day trading the eminis doesn’t necessarily involve anything like stock fundamental analysis. I don’t even pay attention