Advantages of Futures/Forex Trading Over Stock Trading



What are the benefits of day trading Futures and Forex?

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," lets talk about 2 trading opportunities long before your fellow traders open up their trading platforms.

So How Can Futures?forex 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 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. This is not a stock traders' game -- this is strictly a Futures/Forex traders' game.

There is no limit to the number of contracts that trade at that time.

During those monthly 30 to 60 seconds, traders can trade different Futures?forex contracts because they all react to the unemployment report -- the emini S&P 500, the emini Nasdaq, the Dow Futures, EURUSD, GBPUSD, JPYUSD, even the treasuries. 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; 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, 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/Forex 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/Forex traders enjoy two hot trades -- each of which lasts from 30 to 60 seconds.

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

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