Have you been wondering about stocks vs. futures vs. forex? When people hear the mention of the term day trader, many individuals tend to immediately have thoughts about the stock market. However, day traders also are known to engage in conducting trades in the forex market as well as the futures market. There are some day traders who tend to conduct trades in regard to options pertaining to buying and selling. On the other hand, traders who place their concentration on the options market usually are swing traders. This is due to the fact as a result of holding placements for weeks or even days, but not only for part of one day of trading activities.
Main facts about stocks :
A stock is a type of security that presents ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.
If you possess the desire to be successful in terms of your day trading efforts, then it is necessary for you to concentrate your learning as well as your time for practice in regard to one particular market. When the time comes that you have achieved the mastery of the chosen market, it is then considered to be a good time to attempt to engage in trying some other markets as well if you wish to do so.
In terms of day trading stocks, it is important to comprehend some primary factors.
Minimum capital for stock trading
According to the law of the United States of America, there is the requirement of a minimum commencing capital in the realm of day trading stocks, which has been set forth as being $25000 (twenty-five thousand dollars). In order to ensure that you have a buffer that is more than the minimum requirement, it recommended commencing with the capital in the amount of thirty thousand dollars.
Market hours for day trading stocks run from nine-thirty in the morning until four in the afternoon based on Eastern time. There are several day traders who also engage in the conducting of trades during the hour just heading out to the time of the opening of the market. As a result of this being the case, this scenario is referred to as the pre-market.
Many believe that the prime time to engage in the conducting of trades is at the time that the rate of volume, as well as the level of volatility, tends to be high. They normally are perceived to be high around eight-thirty in the morning to ten-thirty in the morning as well as three to four in the afternoon, all based on Eastern time.
There are many different kinds of stocks that can be part of the trading system. Stocks are permitted to be traded on a daily basis, which is what most traders tend to do. Or they may engage in performing research in order to discover new stocks for the sake of trading on a daily or weekly basis.
With these factors in mind, one will be able to comprehend whether the stock market is the place that the trader desire to place his or her focus. If someone does not possess capital in the amount of thirty thousand dollars, then it is a good idea to engage in the conducting of trades pertaining to futures and the forex. If you are not able to engage in conducting trades at the hours that are regarded as the optimal trading times, then your trading activities will probably not result in the amount of success that you would like to see.
Facts about Futures – stocks or futures
A futures contract is an agreement traded on an organized exchange to buy or sell assets at a fixed price but to be delivered and paid for later.
Now when one considers futures in regard to trading, it is also important to give consideration to some prime factors. We can easily compare futures vs stocks day trading:
The benefit of using futures for the sake of day trading is that there is no requirement in terms of a minimum legal amount. It is advised to commence with a capital in the amount of two thousand five hundred dollars up to seven thousand five hundred dollars if you hope to engage in the conducting of trades in popular futures such as the E-mini S&P 500. When you have more money, this increases the flexibility that you possess in terms of the decisions that you make in regard to trading.
The official hours for trading in terms of the E-mini S&P 500 are regarded as being from nine-thirty in the morning until four in the afternoon. It is also realized that there are several day traders who engage in the practice of placing their trades at the time that is just before the opening of the market, which is acknowledged as being the pre-market.
Then in consideration of day trading when it comes to forex, it is imperative to be mindful of some primary factors also.
If you desire to engage in conducting trades related to forex, then you will need to possess five hundred dollars as the minimum amount to get started. However, the recommendation is to commence with five thousand dollars if you would like to see a pretty profitable stream of income each month.
As we know, the main facts about forex we can easily compare with stocks (read our article forex vs. stocks):
Forex trades are highly convenient as they can be traded for twenty-four hours per day from five in the evening on Sunday until five in the evening on Friday. But it noted that not all these times tend to be the best option in terms of day trading.
The prime times for conducting day trading in regard or forex is dependent on the pair that will be traded. The British pound and US dollar combination do well when it is traded during the period of four in the morning until six in the morning on Eastern time as well as from eight in the morning until eleven in the morning based on Eastern time.