There’s a good chance that most people reading this post either are or have been stock traders. After all, most people think first of the stock market when the topic of trading and investing comes to mind. Of course stocks are not the only market available to the individual trader. There are loads of alternatives.
The biggest market in the world is foreign exchange (forex), which accounts for something like $2 billion in volume each day. It’s a market which has exploded in terms of individual trader participation over the last decade, though it was very active even before that. A great many people seemed to have made the shift to forex in the wake of the stock market troubles during the early years of this decade, and increasingly more people are coming in straight up with no prior market experience thanks to rampant word of mouth and aggressive market tactics.
Of course the commodities markets have really gotten a lot of attention the last few years. The runs in gold and energy products brought a lot of people in to the mix there in what used to be the realm of mostly larger traders.
The one market that has pretty much remained a bastion of institutional investors, hedge funds, etc. is fixed income. That’s the interest rate market covering bonds and related instruments. Not too many individuals actually actively trade fixed income. That’s actually too bad given the impact interest rates have on every other market and how exciting the price action can get. (To learn more, read An Introduction to the Fixed Income Market)
So what market did you get in to originally? Are you still in that market? Or have you shifted to something else? If so, why?
Most of us, myself included, just kind of fall in to a market because that’s what we know (or we don’t trade because the market we know doesn’t fit with our schedule or something). That means a whole heck of a lot of us are probably trading a market that is less than the optimal one for us.
We really should give it some serious thought when we decide where to focus our trading. The markets are not the same. Some fit better with certain people than with others for any number of reasons.
Have you really thought about the market you trade? Did you make a conscious decision to trade it because you thought it to be the best fit? Or did you just basically fall in to it?
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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
** See John’s full bio.
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