Commit to Day Trading as a Business
Day Trading in Derivatives
Day Traders Work in a Zero-sum Environment

Popular Things for Day Traders to Trade

You can day trade so many different securities and derivatives! Sure, you want to trade anything that makes money for you, but what on earth is that? Each market has its own nuances, so if you flit from futures to forex (foreign exchange), you may be courting disaster.

But if you know what markets you want to trade, you have a better sense of what research services you need, what ongoing training you may want to consider, and how to evaluate your performance.

You can think about your chosen markets in the same way: What do you want to trade, where will you trade it, what is the risk and return, and what are some of the characteristics that make this market attractive to you?

Item Main Exchange Risk/Reward Characteristics
Stock index futures Chicago Mercantile Exchange Zero sum/leverage Benefits from movements of broad markets
Treasury bond futures Chicago Board of Trade (subsidiary of the Chicago Mercantile Exchange Group) Zero sum/leverage Best way for day traders to play the bond market
Foreign exchange Over the counter Zero sum/leverage Markets open all day, every day, except Sunday
Corn Chicago Board of Trade (subsidiary of the Chicago Mercantile Exchange Group) Zero sum/leverage An agricultural market liquid enough for day traders
Large-cap stocks New York Stock Exchange, NASDAQ Upward bias Good stocks for day trading, large and volatile

What do zero sum, leverage, and upward bias mean? Zero sum means that for every winner, there is a loser. The market has no net gain. Leverage is the use of borrowed money, which increases potential return as well as risk. Upward bias means that, in the long run, the market is expected to increase in price, but that doesn’t mean it will go up on any given day that you’re trading.

The characteristics of the different markets and assets affect both your business plan and your trading plan. The business plan should include information on what you’ll trade and why, as well as what you hope to learn to trade in the future. The trading plan looks at what you want to trade each day and why so that you can channel your efforts.

Many day traders work in several different markets, depending on their temperament and trading conditions, but successful traders have narrowed the field down to the few markets where they want to concentrate their efforts. Start slowly, working just one or two different securities, and consider adding new markets as your experience and trading capital grows.

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