Deciding What to Trade: An Introduction

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There are many different terms used to describe the trading strategies that people use to make money every day. Some people call themselves “momentum” traders, whereas others prefer the title of “swing trader” or “day trader.” No matter what you like to call yourself, the primary purpose of these trading strategies is the same. The idea is that you make as much money as you can by taking advantage of the movements in the prices of assets.

A day trader is a person that purchases and sells their financial securities or assets within the same day. Often, day traders invest in multiple trades a day, making the most of very small market moments to make their fortune. It takes a lot of time and focuses on becoming a great day trader, and a lot of people are left wondering how day traders choose which assets to invest in. After all, it’s not as simple as just jumping on the first options you see in an after hours trading session.

Choosing the Right Market for Day Trading

A successful day trading strategy relies on your ability to spend a lot of time learning about the market you’re in and making fast decisions about the properties that you own. You may execute a large number of trades every day as a day trader. One of the first decisions you’ll need to make includes figuring out which market you want to trade-in. Most people associate day trading with markets with fixed closing times, but a day trader can realistically trade in virtually any asset.

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Deciding what to trade as a day trader will come down to what you’re interested in as an investor, how much you can afford to invest, and how much time you want to spend on your day trading strategy. For instance, the stock market is a common and very popular option for day traders, thanks to the large range of shares you’ll be able to choose from. However, there are other options out there too. For instance, the Forex and futures markets also represent a good place for day traders to make their money. The key to day trading isn’t just deciding what you should trade, but also when you should be trading to get the highest return on your investments.

Knowing When to Trade

Importantly, you don’t need to trade 24 hours a day, or even 12 hours a day to be a successful day trader, but you should at least be consistent with your trading strategy. One good way to maintain your consistency is to set a schedule for when you’re going to trade each day and stick to that schedule. Typically, it’s a good idea to trade when there’s greater volatility in the market.

For stocks and futures markets, typically the best time to trade is at the beginning of the day when the markets open, and at the end of the day when the markets are about to close. Forex trading is a little more complex because the currency markets stay open 24 hours a day.

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