It seems to me that in terms of return on initial outlay, futures trading can provide by far the best return and "bang for buck".
Let's assume that someone is a proficient trader; incredibly disciplined and with great risk management.
Assume one contract (of whatever it is) requires, say, $7,500 to be in your account.
I trade the FTSE, so I'll use that as an example. I don't think it's unrealistic at all to assume that a good trader can make, say, 50 points per week on average (almost AU $1000).
That's around $50,000 for the year, only requiring an initial $7,500 (not sure what the FTSE amount is) or so.
If we are talking in terms of substituting income. Let's say someone even trades 2 contracts, required between $15,000 and $20,000 in the account. And can make $100,000 for the year.
Of course, this all assumes that the trader is actually very proficient. I'm not saying anyone can just go and do this. But if they in fact are, then the returns that they can generate would have to be almost unmatchable using any other vehicle?
To generate $100,000 in shares. Even a whopping return of 30% would require around $300,000 of capital.
I know futures is far riskier (and of couse returns are never guaranteed), but if you are someone who knows how to trade it, it seems like this really is a very good way to generate a good income, for small intial outlay.
I must admit that when Tech first got me onto futures, my thinking became 100 times bigger! And generating some very good results has solidified this thinking.
What are other people's thoughts?
"Bang for buck" can you think of a better alternative?
It seems to buck the 10-30% return thinking.