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Markets

Markets,      

To start with, we will go over what are the best markets to choose, as well as the importance of a number of factors when it comes to the trading itself.

Due to technological improvements, traders now have a seemingly endless options when it comes to instruments. This short piece will go over the pros and cons of everything, as well as hopefully providing you with the necessary information that will assist you in finding the best scenario for your unique circumstances as an individual trader.

The stock market is still probably the most consistent, simple and popular techniques for day trading. This premise is that you buy and sell shares for profits or losses. The tempting aspect of it being that you are now invested in some of the most famous and successful brand’s futures. If you choose this method, you can choose from several indices also, which include some of the following:

  • FTSE 100 – London Stock Exchange which has a list of 100 of the bigger companies.
  • Dax 30 – Frankfurt Stock Exchange with 30 of the biggest German Companies.
  • Hang-Seng – 50 constituent companies on the Hong Kong Stock Exchange.
  • NASDAQ Composite – List and collection of the biggest technological companies.
  • S&P 500 – One of the most consistently popular markets in the United States.
  • Dow Jones Industrial Average – List and collection of 30 of the most powerful companies and business in the United States.

Key Considerations

There is strong and brutal competition when it comes to trading, and especially in the US where many are required to have $25,000 in their account before being allowed to trade.

If you cannot afford to enter these brutal markets, then there are a number of other markets to choose from, however.

Futures Markets

Futures are a contract that is set in place between two parties to organise a trade on a day with a set price down the line.

Your goal is to keep an eye out for the movements in price between when the contract is opened and closed to maximise your profits. These contracts are usually based upon items such as steel to farming situations and foods. Futures operate in a similar fashion to the stock market with their initial premise of how profit is sought to be made.

Key Considerations

There are some important and vital things to acknowledge before you move into trading futures, though, as mentioned below:

  • Capital – Having a few thousand to start with is still recommended when trading futures.
  • Flexibility – You must be aware that the futures market does have a lot of flexibility in how it moves and is conducted.
  • Narrow – Many assets in the futures market are only set and narrowly focused on an individual contract. If you are looking for a broader experience, then maybe the futures market is not for you.

Forex Markets

This is an aspect of trading that has exploded in the more recent times, becoming the largest market on the planet as of today. This is essentially a market where the goal is to turn a profit based on the fore coming exchange rates between nations.

Key Considerations

There is a lot of persuasive features that are exclusive to the forex market when delving into that field of trading, there are some listed below:

  • Time is flexible – The forex market is open 24/7, which makes it a perfect market for those who want to fit their trading life in with their usual daily activities and hobbies, or those who are only able to trade on particular days or times at certain points in the day.
  • Minimal investment is required to begin – The forex market does not require you to be exponentially rich to get started, you can get involved in the forex market for as little as between $100-1000 to start with, something that many other markets do not have the privilege of offering.
  • No commissions enforced in most cases – You, in most cases, will not be required to pay any stacking commissions fees, this is not something that many other markets have the ability to brag about.

Despite the overwhelming pros of forex trading, there is no market that has zero cons, and that is no different in the forex trading market. Below are a number of cons to forex trading that are listed:

  • Trading on market volatility – Despite forex’s flexibility due to its open times, you still have to remain consistently interactive with the market if you aim to earn significant profits, with certain currencies having particular peak times for trading.
  • Difficulty – There is plenty of competition, maybe too much with an oversaturation in the marketplace as well as a high amount of false market trading.
  • Leverage – Leverage can be something that may very well increase your profits, but on the other side of the coin it could be something you live to regret when you see it increasing your losses from time to time.

Despite its cons, the forex market is the most easily accessible market for those to get started into, mainly due to its low bar of entry financially. There is a number of free strategies and more for you to gain information from if you are just starting out also when you begin.

Cryptocurrency Markets

Compared to the past, cryptocurrency traders now have a number of options on the board when it comes to trading. This is a market on the rise despite its lack of clear rules and regulations.

These are ideal for intraday traders, with bitcoin being once upon time traded for just pennies, now in the modern day each individual coin can be trading for thousands in physical money.

There is also a number of options to choose from outside of bitcoin, such as the following:

  • Ethereum
  • Litecoin
  • Ripple
  • Carando
  • Stellar
  • Dash

Key Considerations

There are a number of aspects to consider when entering the cryptocurrency scene:

  • Low cost and low bar for entry – These require a low bar for starting, with you being able to get access to a free bitcoin in some cases.
  • Volatility – Price swings, and big ones at that are something that are a constant when getting involved in crypto, you can gain large profits or losses as a result of this.
  • Exchange risk – Despite the race against time to regulate these markets, there is a massive risk of falling victim to scams, with plenty of them being in-action in the crypto scene at the moment.

Options Markets

This is simply a financial alternative. As a seller you are legally required to meet all the terms of any transaction you may make.

You do not have to actually own an underlying asset when taking part in options trading, with is a huge benefit for many.

Types

There are only two classes of options, both which are clarified below:

  • Put – This is the sell option that enables you to sell at a certain chosen price at a given time.
  • Call – This is essentially the same premise as the sell option, only for buying.

There is also a list of markets to choose from, with them labelled below:

  • Stock options
  • Index option
  • Mini options
  • Mini Index options
  • Options on futures
  • Weekly SPY options
  • OEX options
  • ETF options
  • S&P 500 options
  • Crude oil options

Binary Options

This is when you gain the responsibility of having to assume whether or not an underlying asset will finish above a certain price at a given moment in time.

You are able to trade binary options on options such as crude oil or precious metals like steel and aluminium. You can also take a position on binary options of famous companies such as Amazon and Google.

They are essentially an all or nothing trade. The win and loss are very much so clear before you even begin with the trade from the start. This is a very clear and transparent market, and you will know what you give and get well in advance if binary options is the market you choose to go down.

CFD Markets

Definition of CFD – CFD at its core allows the trader to purchase or sell certain instruments. Whenever you decided to enter or exit a trade is what is the difference maker of certain contracts.

What are some interesting and intriguing aspects of CFDs? Below are some listed:

  • Diversity – With CFD there is an option of over 10,000 instruments. The market diversity is something that is only continuing to grow over time also.
  • Leverage – Leverage can help you increase your profits, which can be tempting, but be aware that there is also a gambling aspect as it could just as easily increase your losses.
  • Flexibility – There is no expiry date or commissions in most cases for CFDs, although there is a larger spread than that of the physical markets.

Choosing A Day Trading Market

Getting by being a day trader is incredibly difficult. The huge variety being the main reason for that.

 Below there is a number of elements to think of before deciding to enter this market:

Volatility

 Volatility, at its core is how much a price will higher or lower over time.

Liquidity

This is how you manage to purchase or sell an instrument without it contributing to any changes to your prices. High liquidity means you have the option to trade multiple time in a day.

Market Resources

If you don’t have an in-depth understanding of your market, then you need to consider the availability of resources. Where will you be able to go for market updates and to gauge day trading market sentiment?

Consider the resources you have at hand when entering any market. Will you have access to market changes and updates? Do you have consistent access to trading online? It is also important to know what the market you are entering offers you, for example, what sources does it offer you as the trader.

Narrow Your Focus

Unless you are extremely talented and experienced, do not even begin to attempt to try and focus on multiple markets at the same time. They vary so much and are so complex that are you are simply dooming yourself to fail. Focus on one market and try to perfect your talents in that one field rather than trying to get a taste for all of them at once.

Demo Account

There are some markets that offer access to demo accounts. Demo accounts often give you the opportunity to have valuable practice on the markets using fake currency before committing your real investments.

Algorithm Capabilities

Deploying an automated trading technique is a great way to increase your profiency. You can enter the parameters you wish and let the bot that you have deployed do all the work for you that you would usually have to find time to do yourself.

Final Word

As previously stated, that was a lot of the best markets at your choosing being broken down to show you what to consider. You will always have multiple choices to go between if you find one market not suiting your style.

There is always a level of knowledge of the market and you as a person are required though before you begin to enter a market. Make use of any educational resources you can find on the internet that may assist you in your goal to becoming a prolific market trader.

Billy Houghton

Billy Houghton is a top acclaimed and sought-after commodities futures trading expert. The expertise and in-depth level of analysis that is offered by Billy Houghton is what has managed to put him at the stage of being the top ranked author for MetaNews among multiple different categories. Throughout his career, Billy has specifically spent over three decades on Wall Street fine-tuning his skills, which included over two decades at a trading desk. In more recent times, specifically the last decade, Billy has been researching algorithms of AI in futures trading, and believes they are the future of trading.
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