Which is tougher... Oil trader or stocks trader?

[maverickai]

Hi,

I'm curious about the kinda variance, or 'bankroll' swings in these two kinda trading. From what I know, oil is commodities, and they are supposedly more stable. Stocks are more volatile in nature.

So when any veterans have any advice on choosing a career between oil and stocks trading?

[pig4bill]

I think stock trading is much easier.

[Ps3tn0NcYk]

Actually, in the current climate, oil has been more volatile than the average stock (if by stock you mean your typical equity index futures contract).

This piece of advice was passed down to me from a 30 year veteran in the Pork Bellies pit at the Chicago Mercantile Exchange when discussing whether stocks or commodities are better trading vehicles:

"Stocks have a bias to go up."

With that said I find that markets with high and increasing volatilty -- volatility defined as large intraday swings -- are better for trading than markets with low and declining volatility.

I suppose my only real advice is the following: don't get sucked into "trading" penny stocks unless you happen to find yourself in the position of a registered market maker or large player in the a convertible arbitrage game.

[kimchi]

It depends upon what type of trading you want to do, and what you mean by 'tougher'.

Commodities trend better than stocks, so if you are trading trends it will be easier with commodities.

Volatility isn't so important from a risk perspective as you can reduce a volatile market to having the same risk on your portfolio as a docile market through good risk management and position sizing. I think volatility becomes more important when you shorten your time horizon. Trading a slow stable market isn't going to yield much, but will generate proportionately more trading costs.

[JJay1231]

Ive traded both and all I can say is "it depends" on the individual. No one can say one is "tougher" than the other to trade. Also there are stocks that are more volatile than Oil and vice versa. If you are looking to trade with a "longer" time frame you will need a larger bankroll than that of a short term trader due to variance regardless if you trade commodities or stocks.

Having said that, just trading Oil can be quite rewarding, as you are giving it your full attention and in time you may find that you can get "in tune" with the way it behaves and know without even looking back at the chart, what the key support/ resistance levels are.

I started trading a handful of commodity futures after stock trading, and found my results really improved from that of stock trading. No doubt it was because I only had a few to keep a close eye on on a daily basis, and not dozens of stocks.

Combined with leverage, Liquidy, Volatilty and no probelm going "short", Light Crude futures is a very good market to trade, IF you have a plan and know what you are doing ofcourse.

But ofcourse there will be people who have had the opposite experiences/ opinions than me, which just shows you that "it depends" on the individual.

[ArturiusX]

Its like asking whats tougher, 7 card stud or hold em. Both are different and it depends on the person.

[maverickai]

So... how about personality of the person? Like how much is the person a risk taker? I always hear of pple making a killing in the stock market, but never in commodities trading.

Can I say oil trading and stock trading is kinda like LHE and NLHE respectively?

[mal_noles]

[ QUOTE ]
Can I say oil trading and stock trading is kinda like LHE and NLHE respectively?

[/ QUOTE ]

I would probably reverse it just based on the margin involved and the current vol in crude.

I was originally an equity options trader and now trade energy. On some levels trading is trading, I personally prefer commodoties because its better natural fit for me and I like the more macro viewpoint involved.

I have done far better trading oil than options because I think there are more exploitable trends and patterns in certain energy spreads and products currently.

If you have anymore specific questions I am more than happy to answer them.

[kimchi]

[ QUOTE ]
I would probably reverse it just based on the margin involved and the current vol in crude.


[/ QUOTE ]

How is the IMR and volatility relevant? Unless your account is too small to support a contract, or too small to support enough contracts for you to build a properly sized position - I don't see how these are relevant.

If you're trading a volatile market, you just size your positions accordingly so each market has an equal risk on your portfolio or account when you hold a position.

I trade a small account. In early March this year I was unable to bet on equity indexes due to the volatilty. My system wouldn't allow a single contract. If I had a reasonably sized account, then the volatility would just have meant that I would have had to buy less contracts than previously in order to keep within self-imposed risk limits.

[ArturiusX]

[ QUOTE ]
So... how about personality of the person? Like how much is the person a risk taker? I always hear of pple making a killing in the stock market, but never in commodities trading.

Can I say oil trading and stock trading is kinda like LHE and NLHE respectively?

[/ QUOTE ]

No.

Risk taking is almost a non-factor in real trading. Sure, we all like the romantic wall street notion of a guy with huge balls, but in reality, thats a very small part of the make up. Its like saying a poker player has balls... I mean we do, to an extent, but thats not why we're good poker players.

The main differences is obvious, the underlying security is a vastly different product, so obviously its going to be priced differently and sought out by a completely different group of people. This changes its dynamics, what its price movements look like, and the opportunities you'll be presented. Thats when i say personality; each has different characteristics.