http://www.ForexAutopilotRobot.com - BEST Forex Day Trading - Choosing What to Trade - You can trade anything from baseball cards to orange juice futures but you cannot trade them all and expect to do well in all of them. The name of the game is specialization and you need to become an expert in one asset to learn the nuances of the market. In choosing what you are going to trade, you need to look for an asset market that give you the ability to stretch your dollar and use leverage, allows you to buy or sell easily, quickly and as often as possible and finally, you ideally want an asset that does not have large capital requirements. Let us look at these market qualities in a little more detail. First of all, you want to have the ability to trade on borrowed money and this is called leverage or margin. You will typically be allowed to borrow on the securities you already hold in a brokerage and the percentage of leverage will depend on the volatility of the securities. For stocks and stock mutual funds, it is typically 50% and it will be more for bonds which do not fluctuate in value as much. And not all securities are marginable, like penny stocks which can be extremely speculative. Next, you want a very liquid market that has a lot of buyers and sellers so you can buy or sell at any time during the day or even 24/7. An example of an illiquid market is real estate where you cannot buy and sell a house or building in the same day, let alone the same hour, and an example of a liquid market is foreign exchange futures which trade round the clock. There is also an element of price certainty in very liquid markets so you can be reasonably sure that the price of something you bought this morning is not going to move too much-either up or down-by the time you are ready to sell later in the day. Finally, you want to able to move large amounts of potential gains without having to come up with large amounts of capital. An example would be the stock market where you can trade shares of a stock or buy the options on that same stock for pennies on the dollar for a short period of time. A 100 shares of a $50 stock would cost $5,000 but buying the options on that same position may cost only $500. If you have the capital to make a meaningful position and therefore a meaningful profit, there is nothing wrong with day trading shares of stock but for the same amount, you could set up several trades. You are the best judge of what asset market you want to trade because you will be spending a lot of time in front of that market all day, so choose one or two markets that meet the above requirements, give you a sense of confidence and make you feel comfortable. Day trading is no place to be stuck doing something you do not like. Jay has spend over 2 decades in the investment industry and is now retired. If you found this article useful, please visit his latest diversions at Daybed Bedding Sets and Day Bed Covers.
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