How is Futures trading different from stocks and options?
With stocks, you’re taking partial ownership of a company. Whereas with futures, you’re entering into a legal agreement to buy or sell an asset at a specified date and time.
The benefits of trading futures over stocks is that they have significantly better tax advantages.
If you’re day trading stocks or swing trading them for less than a year, you’re taxed at 100% short-term captial gains; meaning you pay more.
If you’re day trading futures, you’re taxed at 60% long-term capital gains; meaning you pay nothing or signifcantly less, and only 40% short-term capital gains.
Additionally, you have to scan for different stocks everyday to see which one is in play to maximize your trades. With futures you trade the same markets everyday and therefore you eventually get used to how the price action works. And unlike stocks, with futures you can manage your positions overnight and can trade almost 24 hours throughout the day without having any kind of liquidity problems.
