Should I trade the Nasdaq Futures or the FANG stocks/options?

At Futures Trading Coach we get a lot of questions from traders that are curious about futures but may be a bit scared to trade them or unsure if it makes sense for them. This curiosity comes from both a risk standpoint and also a cost standpoint. Many traders are trading both stocks and options, for example, in the FANG (Facebook, Amazon, Netflix and Google) stock group. The next question then becomes whether it is more practical to just trade the /NQ future for example VS these individual stocks or options on those stocks.

I ran across this article from the CME Group which really outlines the case for trading the future (something we as futures day traders have known for years) vs the stocks. We really suggest clicking on the link below and reading that article and then contact us for more information. You can take our 10 DAY FREE trial to our trading room where we trade the /NQ daily. You may also use the contact links on the site for a totally free phone consultation where we can answer any specific questions you may have more in depth.

Some points in the article are:

  • There is a correlation of roughly .89 on the /NQ futures vs trading the FANG stocks so almost 1 to 1
  • YTD market Value and returns follow very similar trends
  • Execution costs are far GREATER  using the stocks vs trading the futures
  • Commission are far GREATER using the stocks vs trading the futures
  • In some instances and countries futures positions and day trades offer better tax efficiencies over the stocks

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