The majority of people tend to think of the stock market when thinking about investing. For day traders at South African forex broker plus other investors might also think of having to participate in the forex and futures trading markets and each of the markets work very differently. You need to learn more about them so that you can be able to make an investment decision that is well informed.
Know the risk when day trading
Day trading is normally defined as having to buy and sell or sell and buy the same security on the same day using a margin account. While you buy and sell securities very fast, it might be quite exciting, leading to a faster profit, the risk that is substantial is also involved in the same. The scenario which is worst has to lose a significant amount of money very fast.
If you plan to get involved in day trade, then there is a need to have a strategy and ensure to stick to it. For a variety of investors, holding and buying is the best strategy when you are looking out for profits in the long term.
Deciding what to investing between forex stocks and futures
Today trade in stocks
Stocks are known to give you some ownership in whatever company. If you think of day trading stock, then the following are some facts that are key that you need to know:
- In the USA, the starting capital on the minimum to be a pattern day trader is capped at 25000$. A pattern day trader refers to someone that executes four and above days trades within the known five business days.
- The market hours are normally between 9.30 am up to 4 pm the ET. Most days the traders are known to place their trades in hours before opening which is referred to as pre-market.
- There are some of the best times for trading which are normally between 8.30 am to about 10.30 am and between 3 pm and 4 pm the ET which is when the volatility and volumes are quite high.
- There happen to be large numbers of stocks that you can be able to trade-in. You are free to trade in the same stock or few stocks each day because the majority of the traders normally do it, or carry out research in finding out new stocks which you can get involved today trade every day or every week.
Based on the above factors, you will be in a position of seeing whether the stock market will be a good fit for you. If you don’t have the minimum amount that is required to start trading in stocks, then you need to consider going for forex or the futures, which tend to require starting capital that is very low. If you are unable to trade during the hours which are optimal, then you should know that your efforts might be unfruitful as compared to how it would be if you availed yourself during those hours.
Day trading futures
It is all about an agreement to sell or buy a commodity in the future. You can try speculating on the way the commodity is likely to move in the future. If you think of futures day trading, the following are factors that you need to know before you make a decision:
- There happens to be no fixed minimum amount that you require to start on future day trading. The more money you have, the more you become flexible with your trading decisions.
- The hours for trading for the ES sticker for the S & P 500 E-mini are normally from Sunday to Friday between 5.00 pm to about 4.00 pm CT and there is normally a trading halt that occurs between 3.15 pm to 3.30 pm every day and also there is maintenance daily between Monday to Thursday between 4.00 pm to 5.00 pm.
- The majority of the day traders for futures normally focus on opportunities in a single future contract after having gained proficiency trading on the same. With that said, there are other day traders that prefer trading where the action is found, they decide to choose futures contracts which are seen to be big movements or volumes on a particular day.
Based on the above factors, you are likely going to see if you will embrace the futures market as you day trading
Day trading forex
Forex trading normally involves having to use capital in investing in foreign currency which is based on the way you expect change rates to have fluctuated. The exchanges and the securities commission notes that it is a type of day trading that can be quite risky and it is not for the faint-hearted. If you feel that the forex could be your day trading, then you have to remember the following factors:
- There are some forex brokers who happen not to have a minimum requirement for investment. A good rule to check out before making a decision is the amount you need to invest and it should not be more than 1% of your forex account on any one trade. If you want to trade with 100$ at a go, then your account needs to have 10000$.
- Forex trading happens 24 hours a day from about 5.00 pm the ET on Sunday to about 5.00 pm ET on Friday. But it is not all this duration that will be ideal for your day trading.
- Times that are good for you to trade forex will entirely depend on the pair that is being traded. The GBP/USD might be the best to do trading between 4.00 am up to about 6.00 am ET and then again between 8.00 am to about 11.00 am ET. For the EUR/USD, the best time for trading will be from 9.00 am to 2.00 pm ET.
There are several currency pairs that you can pick from but if you are a newbie in day trading, you need to stick to GBP/USD and EUR/USD.