When you begin trading you will realize pretty quickly that there are various types of markets to trade in and even more types of trading strategies. Over time you will become knowledgeable and comfortable enough to make money in most of them, however to start I highly recommend you master a single strategy in a specific financial market. The following is a guide to some of the popular markets and strategies which I’ve come across and information to help you decide what is best for your current situation and temperament. Money can be made in the markets in many different ways, determining where to start based on how much capital you have and what type of person you are is the key to beginning your trading journey successfully. If you still have questions after this or want personalized recommendations and tips please set up a 1v1 session with me from the link Here.

Financial Markets

These are some of the most popular markets that I would reccomend looking into and understanding as your begin your trading journey.

Forex

This market has become the largest financial market in the world with $6.6 trillion in daily volume. It’s open 24 hours a day for 5.5 days of the week. Basically FX trading is the exchange of one currency for another, involving buying one currency while simultaneously selling another.  It can provide high returns because you can utilize leverage up to 200%  but has just as high risk. Forex is made up of 4 exchanges which overlap at certain times of the day which are often the most volatile times in the market. The US dollar is the most traded currency followed by the Euro, then the Japanese Yen. The biggest advantages of the FX market is it’s low barrier to entry and ability to use leveraged accounts. It’s also very flexible since trades can be made 24 hours a day and transaction costs are typically very low. 

Crypto

Cryptocurrency is a virtual currency which is held in digital wallets and is secured by cryptography making it virtually impossible to counterfeit. Most cryptocurrencies are decentralized meaning it is not regulated but is protected through a network of computers and technology called the blockchain. The fact that many exist outside the control of governments and central authorities can be a pro and a con. Crypto offers faster and cheaper money transfers and doesn’t have a single point of failure. The downside is high volatility, it takes a lot of energy to mine, and crypto is being used in criminal activity. Doing well trading in this market basically comes down to research, knowing what crypto will catch on, which will be interrupted by government policies, and how public sentiment will change.

Stocks

The stock market is a broad reference to the exchanges and venues which offer the buying and selling of issued shares of publicly traded companies. The US stock market is regulated by the Securities Exchange Commision (SEC) and can be a great way to capitalize off the growth or fall of large companies. The two largest US exchanges are the New York Stock Exchange (NYSE) and the Nasdaq. This market, much like the forex market, is made up of banks, hedge funds, and hundreds of thousands of individual investors. This market is open Monday thru Friday 9am-5pm Eastern time, the typical investor is not able to trade outside of these times. When trading in this market long term it is important to understand how to determine a company’s value and how that might change over time due to their own operations as well as public sentiment.

Indices

An index is a way to track performance of an industry. When buying indices one is buying a basket of securities or collection of stocks which are big players in a certain industry. This can be an advanced way to trade compared to buying the S&P 500 or the Dow Jones Industrial Average. One can use their industry knowledge to bet on the rise or fall of specific industries as a whole. For example one can use knowledge of cyclical markets like real estate or oil to make trades betting for or against the whole market. Many investors will buy indices as a way to passively invest in industries rather than trying to outperform the market on their own. The key to getting started in this market is to focus on researching and understanding a couple industries to passively or actively trade.

Trading Strategies

For the sake of  explaining and understanding these trading techniques easier I will separate the strategies into two main categories. The first category (Indicators & Price Movement) is for those of you who are focused on shorter term trading, these techniques will not be as concerned with researching economies, reading news, and determining long term strength of the object being traded. The second category (Economics & News) is geared towards longer term traders who will be researching political policies, strength of economies or stocks, and how everything interacts and affects each other. I will use some trading lingo in this article so don’t feel bad if you don’t understand everything, however learning these words and what they mean is the first step to becoming a great trader.

Indicators & Price Movement

Strategies in this category are trades made in short time frames. Focus will be on finding entry price points and buying when the market is at a discount, or selling when at a premium. First we determine if the market is bullish or bearish, then we find the trading range (the fibonacci tool is great for this), then we wait for time frames when the market is most volatile and begin catching waves.

Scalping

Scalpers are traders who use 1, 5, and 15 minute time frames and wait for large expansion or retracement periods. They wait for high volume to make higher percentage risk trades and take small wins of as little as 10 pip gains multiple times throughout the session. With this strategy you will use tighter stop losses and will take gains quickly. A longer term trader might risk 2% of their account on a single trade while a scalper might risk much more using higher lots so that a small pip movement will give them a good percentage gain. Using this strategy I like to focus on making 1% a day and compounding those gains day by day over the weeks, months, and years to grow the account quickly. The most important thing to perfect with this strategy is getting good entry points. Wait for the market to start moving and take advantage of the wave. If you can master this, the gains you can obtain in a month are nothing short of ridiculous. Who might this strategy be good for?

If the following traits describe you this might be a great strategy for you:

• You have low startup capital & want to grow your account quickly
• You have time to sit in front of your computer to buy & sell during volatile session times
• You are comfortable taking high risks & enjoy the excitement of quick price movements
• You lack the patience to wait days or weeks for your trades to make you money

Swing Trading

A Swing trader like a scalper looks primarily at the combination of price & volume rather than the fundamentals of the stock or currency pair. The main difference is with swinging we are using longer time frames, one will create support and resistance lines on the Daily, 4hr, & 1hr time frames. We will use looser stop losses, risk no more than 2% of our account, and hold trades for multiple days if necessary waiting for larger pip movements. This strategy requires a bit more patience as well as emotional control. Markets will make drastic moves, consolidate or retrace for a while and continue moving in the same direction. You will have to be able to weather the slow times with this strategy to get the best gains. Who might this strategy be good for?

If the following traits describe you this might be a great strategy for you:

• You have some capital to trade
• You don’t have time to sit in front of your computer all day
• You can calculate risk vs reward to set stop losses and take profits
• You are patient and trade technically not emotionally

Economics & News

Trading in this category requires an in-depth understanding of the market you are trading and keeping up to date with news and press releases that will affect the value of your assets. Typically this is used for longer term trading where you will hold a trade for weeks to months. Onoe should research the price movement years into the past and understand what makes the price move for the stock or currency. This can but is not limited to global economies, policy changes, company growth plans, major environmental catastrophes, and cyclical market movements. This still requires knowledge of how to determine good entry points in the market but are more concerned with long term gains than what happens in the short term. The key with this strategy is only buying/selling assets you understand, are passionate about, and continue to learn about. Who might this strategy be good for?

If the following traits describe you this might be a great strategy for you:

• Those with large amounts of capital
• Those who prefer low risk investments
• Those with high emotional control
• Those devoted to understanding the market in-depth
• Those with other jobs & responsibilities who don’t have time to sit at their computer