Here’s a question I know a lot of new traders have – or at least they should have – as they are getting started in trading.
I am trying to figure out what market fits “me” or “my personality”. How can you do that without having tried to trade all those markets first?
In the end, it might come down to giving different markets a test drive of sorts, but before that point there are a couple of things to think about when selecting a market to trade.
Some markets can be ruled out based on the timeframe you have to work with. For example, you aren’t going to day trade stocks or futures if you can only access the market outside of exchange hours. Generally speaking, the longer your trading timeframe term the more markets are open to you. The shorter the timeframe, the fewer become realistic options.
As much as the barriers to entry have been lowered in manyÂ markets, there are still things that have minimums which rule some traders out. The futures market is a notable example there. The contracts are of a fixed size with specific margin requirements. If you don’t have the margin capital, plus a heathy amount beyond that, then you can’t play that market. Even a market like stocks where you could play with relatively little money might not make sense for some people because of the transaction costs.
It helps to trade a market you have an interest in. It will make you more eager to learn and understand and not just make it some abstract thing. This can be an important contributor to having a long-term positiveÂ trading experience.
Access to Tools and Information
This is a fairly minor point at this stage, but in some cases you will have better access to what you need to trade in one market than you will another.
I think you’ll find that if you work through this list you’ll probably find a market which suits you without having to try them all out. And even if you can’t make a final selection between a couple of alternatives, you can always demo trade those markets to see which one feels most right.