So you got a taste of the markets and trading and now you are getting more involved, excited and looking to progress. Many questions ahead for you as a trader and as time progresses you will evolve and find out if trading is suitable for you and if so what type of trading, what type of risk capital and other questions that will come up. Many of these will appear as you progress and your knowledge increase. Some of these questions need to be answered before you start trading.
- How much risk capital do I have?
- What markets do I want to trade?
The answer to question 1 will vary for each trader based on their financial situation but the bottom line is, make sure you trade with money you can afford to lose.
The answer to question 2 has a few levels: First is what asset class are you looking to trade? Stocks/equities? perhaps FOREX or maybe futures? Since my area of expertise is futures, commodities and future options I would like to expand on this asset class.
Trading futures offers many advantages as well as some drawbacks. For many traders who prefer to day trade ( you enter and exit the position during the same session and avoid holding positions from one day to another), trading futures is a great alternative to day trading stocks. In stocks you need to have minimum of $25,000 to day-trade. In futures you only need $2500. The build in leverage in the futures market, intensified by the even more so reduced day trading margins, creates a double edge sword: Small moves can translate into big wins in your pocket BUT small moves against you will also translate into big losses in your account….
