"But There's More Leverage in Futures!"

Several readers responded to my post on why trading stocks is easier than trading futures, pointing out that there's more leverage when trading futures compared to stocks.

This is true, but it ignores a very important point.

For the vast majority of traders - even those with small accounts - the limiting factor is not buying power.

There's no point in having lots of leverage if you're never going to be able to take advantage of it.

The binding constraint for most traders is creating a strategy that can scale at all.

Most traders never get to the point of confidence to be able to truly take advantage of the leverage, even with trading stocks.

And creating a strategy that can scale is far easier with stocks than with futures for the reasons I outlined in the original post.

Thanks for the responses.

-Dave

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