The Right Market
Every detail in a part-timer’s strategy for trading the markets must be well considered and the choices made consistent with their objective and their knowledge and skills in mind. This most certainly includes the selection of the market to be traded.
We are addressing the question of which market to trade at this stage in the book because it greatly influences the decisions made later on in the process. The market you trade dictates the brokers you chose from and can weigh heavily in deciding which approach and methodology to use in your trading. That is why we want to get the market determined right off the bat.
Most new traders just kind of fall into a market when they first get going. Oftentimes the stock market is the one the majority of people immediately associate with trading. While stock trading does have the largest number of participants, it is not the largest.
Surprised?
Keep in mind that stock trading, even in the current global market environment, is still a very regional thing. Most trading in the U.S. stock market, for example, is done by U.S. traders. The same is true for other stock markets, and interest rate (fixed income or money markets) as well.
The foreign exchange (forex) market is the one true global market. It accounts for about $1.5-$2.0 trillion in daily transaction volume, compared to $350 billion for the combined US stock and interest rate markets.
The point we are trying to make here is that there is more out there to trade than just stocks. In this day and age, as an individual trader you have access to basically any market you like. There are no longer markets you could point to as being strictly for “professionals”, or anything like that.
Posted: under Chapter 3.
One Response to “The Right Market”
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September 9th, 2007 at 4:44 am
I agree with you on their being so many more things to trade than stocks, but it is hard for most people to move beyond their comfort zone. You can see trends in trading, and I think many people saw millions and billions being made in the late 1990’s so the general public that had no exposure to stocks before wanted in. After that it has been options and flipping real estate, and where fortunes are won, kingdoms are also lost, but I do see that more people will move into other trading areas.