Advantage of Futures VS Stock Market
One of the big advantages to trading futures compared to the stock market is that with futures the money you have in your account can be earning you interest if you buy U.S. Treasury Bills with it.
To give you an idea how much interest, you can check here: www.bankrate.com/brm/ratewatch/treasury.asp
Bankrate refers to them at 91 day and 182 day but most people call them a 90 day and 180 day T-Bills.
Most brokers will let you use 95% of your T-Bill toward your margin requirements.
This means you can be earning interest at the same time you’re trading.
With the stock market when you buy a stock they take the money out of your account, if you trade on margin then you have to start paying for the money your borrowing.
When you buy a futures contract you just have to keep the margin required in your account, nothing gets taken out until the price moves or you sell.
The interest you collect is not going to make or break you, but it is a nice little added bonus. And it does earn you 4% for the year. If you’re trying to earn 10% per year in the stock market then trading futures you only have to make 6%.
To give you an idea how much interest, you can check here: www.bankrate.com/brm/ratewatch/treasury.asp
Bankrate refers to them at 91 day and 182 day but most people call them a 90 day and 180 day T-Bills.
Most brokers will let you use 95% of your T-Bill toward your margin requirements.
This means you can be earning interest at the same time you’re trading.
With the stock market when you buy a stock they take the money out of your account, if you trade on margin then you have to start paying for the money your borrowing.
When you buy a futures contract you just have to keep the margin required in your account, nothing gets taken out until the price moves or you sell.
The interest you collect is not going to make or break you, but it is a nice little added bonus. And it does earn you 4% for the year. If you’re trying to earn 10% per year in the stock market then trading futures you only have to make 6%.
