Why Day Trade Futures Over Stocks?

The popularity of futures trading continues to grow driven by products such as Micro E-minis which allow traders to participate in the same markets as Wall Street at a fraction of the cost. When it comes to day trading specifically, futures markets offer several considerable advantages over trading individual stocks.

Learn 5 reasons to day trade futures vs stocks in this 3-minute video:

Low Account Minimum to Day Trade

When day trading stocks, a minimum account value of $25,000 is required due to “Pattern Day Trader” rules. This can present a substantial financial limitation for day traders of individual stocks.

Since futures trading relies on margin*, or the use of borrowed capital, you can day trade with a significantly smaller account balance including only $400 with NinjaTrader Brokerage. Margin can be thought of as a down payment on the full value of a futures contract.

Futures intraday margins are determined by brokers & clearing FCMs and futures overnight margins are determined by the exchange. As long as you meet the margin requirements, you can trade as much as you want long or short.

Trade More with Less

As highly-leveraged investments*, futures provide the ability to control a large amount of notional value with relatively small amount of capital. Leverage is the backbone of futures markets and all participants rely on borrowed capital to potentially increase returns while risking the minimum amount of money.

Compared with trading stocks or even leveraged ETFs, futures require much less capital up-front and provide the most leverage for the margin. This allows traders to control contracts much more valuable than their initial investment.

Since day traders may stay in a trade for just a few minutes or even seconds, highly-leveraged assets such as futures help make such short-term trading more financially feasible.

*Please note: Financial leverage can result in losses greater than the initial margin and traders should be aware of the risks involved in trading futures.

Enter & Exit Positions with Ease

For day traders, liquidity is of utmost importance as it ensures they will be able to buy and sell with ease. A liquid market provides the ability to time entries and exits within a market without the concern of whether enough trading volume will be available to execute the trade.

Unlike futures markets where traders can expect high liquidity daily, volume in individual stocks can vary greatly from day to day and traders may have difficulty initiating and liquidating positions.

Trade Futures Around the Clock

Compared to stocks & ETFs which have a regular trading session of only 6.5 hours, futures products trade nearly 24 hours a day, 6 days a week. For day traders, this allows for more trading opportunity and the ability to manage positions any time of day.

For equity index futures traders, E-mini & Micro E-mini futures allow traders to participate in equity markets both before and after the stock market’s relatively short trading session.

Get Started with NinjaTrader

NinjaTrader is the premier destination for futures trading, with deep discount commissions, a $400 account minimum, and $50 day trading margins on Micro E-mini futures.

NinjaTrader supports over 500,000 traders across the globe with a powerful trading platform featuring 100+ day trading indicators and award-winning brokerage services.

The NinjaTrader trading platform is always free for advanced charting, market analytics and trade simulation. Get started with NinjaTrader and register for a free futures demo.

Although highly liquid, futures markets can also experience rapid price fluctuations and only risk capital should be used for trading.