O.K. newby question here, when trading futures you would presumably stick with the traditional 2% of your capital at risk at any given time, yes? Assuming that's the case, how can futures (or any leveraged instrument for that matter) be more profitable than say a fully paid ordinary share without taking on more risk? At face value, to my way of thinking, a penny stock which can run from say 10 cents up to $4.00 has a dramatically lower risk v reward than an instrument such as the SPI. Would I be correct in saying that to make the most of the futures market one would trade a hypothetically larger account than their cash assests can really support and that in doing so dramatically increase the risk of ruin due to a substantial drawdown?
I guess I'm trying to work out which instrument gets maximum bang for buck in the aspect of risk vs reward, but not only that, also how a trader can maximise the profitability of their account by means of the different forms of leverage and how the risk element comes into play.