When you decide to become a day trader, you will have to decide which to actually trade. After all, you won’t only have to trade forex, or stocks. All those have their own traits and qualities. All of those also have their own inherent risks. Now, how do we choose the markets we want to day trade in? Let’s talk about two of these markets: Stocks and Forex.
Before you jump in to day smart online trading stocks, you may want to check out the following first.
First, if you want to day trade stocks, you are required to have a starting capital of $25,000. What’s the recommended total starting capital? $30,000.
Second, be mindful of the time. The market hours are from 9:30 AM to 4 PM Eastern Standard Time. A number of traders also place trades in the hour leading up to the open. This is so called the pre-market trading.
Lastly, you got a nearly uncountable number of stocks to trade. That can be an advantage and a disadvantage. Your choices are to trade the same stocks every day or to conduct research and find new stocks every day or week.
Based on those factors, it’s possible for you to see if the stock market attracts you as a day trader.
Now if your problem is you can’t reach the $30,000 initial firepower, you may want to look at forex, which requires lower initial capital. We’ll tackle more of that later. As for the market time, if you can’t trade during those hours, you may find your trades being inefficient.
Anyhow, a huge number of day traders prefer to trade the same stocks every day, without regards to global events that are taking place. What’s the advantage of doing this?
Once you have focused and spent time mastering one stock trading strategy, you will only need little extra research since you are always trading the same stock.
Meanwhile, other traders prefer to trade high interest stocks on a particular day, and then some other types of stocks the next. This one will require you to do more research and digging each time.
The main decision you’ll have to make is whether to day trade the same stocks all the time, or change them daily or weekly.
If you plan to choose forex, here are the things you must keep in mind:
First, your starting capital should be from $500 to $1000, or higher if you aim to have a decent monthly income flow.
Second, the forex market is open 24 hours a day, 5 days a week. It starts from 5 PM EST on Sunday to 5 PM EST on Friday. However, not all these hours are ideal for your trades.
Third, in relation to the second one, different currency pairs will perform differently depending on the trading time. Major pairs like the GBP/USD and EUR/USD can perform best between 3 AM and noon EST.
Lastly, there are also plenty of currency pairs. However, beginner day traders are advised to stick with the EUR/USD or GBP/USD. These pairs give you sufficient volume and price movement to generate a good day trading income.
As suggested, if you have limited capital, forex day trading may better suit you than stocks day trading. The time is also very helpful, giving you a way to trade outside of the normal US market hours. You can check forex online reviews for more insights.
You have to weigh all these things before you choose, and that also entails further digging. It will all depend on your strategy and goals.