The Difference Between Trading in Futures and Shares of Stocks

The Difference Between Trading in Futures and Shares of Stocks

There are some people who do not really know what makes Futures trading different from Shares of Stocks trading.



There are many who have stock accounts and like to buy and sell shares for a profit. The truth is, some think that the Futures is better than the Stocks as it has more advantages. Here are some of the differences between the two and it is up to you to figure out which one is best suited to your personality and goals.

  • Shares of stocks are generally considered as capital gains, this means that you are going to be required to pay the Capital Gains tax which will depend greatly on the length of time that you hold it. Futures on the other hand are considered as short term capital gains even if the holding period is long term. This means that 60% of the gains are considered long term while the 40% is considered short term.
  • A portfolio that is solely based on futures alone or shares of stocks alone performs less than when it is a balanced portfolio of shares of stocks and futures.
  • Futures trading is less open to manipulation and rigging as the trade is too fast and is based on information which is highly secured. There are more inside information trading done in shares of stock than there is in futures.
  • Shares of stocks are considered an investment while Futures Trading is not. Futures are based on speculation dependent on the political and economic atmosphere which may affect the goods that are being traded.
  • Trading in futures is technically no different from trading in stocks. The odds of making a right or wrong decision are similar if not the same. However, because there are lower margins involved in futures, traders make more money out of trading in stocks.

Related Posts

UK Housing Properties Prices Move Up There has been increase in the residential properties during the last seven months in continuation due to much better improvement in the unemployment ...
Renting properties for Income What’s the point of working your entire life just to get by? Some people can work their entire adult lives and not make enough money to afford retirem...
How can i get money to start my own business There are several sources available that can provide funds for your business. You need to make a choice after careful analysis of each source. Then y...
Creating a Great Work Environment So you can’t offer your employees a signing bonus, union wages, or a company expense account, that does not mean that you cannot create a great workin...
Stock Exchange Investment 101 It will only take around $5000 to start investing in the stock exchange. But word of warning! Do not use money which you cannot afford to lose like yo...