The Correlation Of U.S Stock Returns With Overseas Stock Returns Figure Out the Market You Want to Trade

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Figure Out the Market You Want to Trade

It’s easy to be lulled into a false sense of comfort when it comes to trading. There are many gurus who say they have a single guaranteed path to success. The reality is a little different. There are so many factors that affect your potential success that everything needs to be adjusted in trading. Your actions should be designed for what you want and how you want to do it. Don’t let anyone tell you otherwise.

In this article, we’ll find out which markets make sense for you to trade, and I’ll cover a seven-point checklist that can give you the best idea of ​​how you can choose the markets that might work for you. In today’s environment, people look at futures and currency trading as a low entry cost with the highest profit potential, while the checklist can work for both industries, we’ll just look at how it can work in the futures market.

Checklist of 7 points:

1. Get a margin sheet of all traded markets.

2. Understanding initial margin and maintenance margin.

3. Determine which markets have a smaller margin than your account.

4. Find out the minimum values ​​of ticks or pips of these markets.

5. Determine the average true range to select acceptable volatility.

6. Arrange the short-list markets from least to most volatile.

7. Check the “open interest” for each market to find the most liquid.

Now let’s dive into finding a trading market for you.

There are just over 60 retail markets in the United States. While the universe of futures and commodity contracts may number in the hundreds around the world, they do not come close to tens of thousands of stocks. This virtue alone makes it easier to navigate these markets – there’s not a lot of information to sift through.

At the same time, it’s important to understand what you’re up against. While stock prices can be clearly seen by their stock symbol, commodity prices have no correlation to the amount of margin charged. A secondary problem is the fact that margins fluctuate based on volatility. As the market becomes more active, the margin will fluctuate higher as a hedge against speculation. The less active the market, the margins will fluctuate downwards to make them more attractive to trade.

So the only way to determine if you can trade one of the 60 trading markets is to get an updated margin. You can find an updated field sheet online. Each market is listed along with the margin and symbol. Every market adjusts and it is very important that you learn the details of the market you want to trade.

There are six categories that markets fall under:

1. Agricultural

2. Metallurgical

3. Percentage

4. Indexes

5. Foreign currency

6. Energy

Choose a category and then narrow down your trading experience to one or maybe two markets in that category. I often hear from stock investors that they don’t know where to start when it comes to trading futures and commodities. These investors may have 15-20 years of experience in stocks and suddenly they think they need to throw all that experience out the window.

The easiest way to choose a category is to look back at the different types of stocks you’ve invested in over the years. If you’ve been in the tech sector a lot, look to the NASDAQ. If you like mining companies, look into the metals or energy sector. If you have a good idea of ​​the dynamics of the stock market, you might be following the Dow Jones.

When all is said and done, focus on the markets that already pique your interest. As long as they interest you, you will follow them and want to know more. If you are the type of trader who chooses markets just for the sake of the markets or because of some technical indicators, when the market does something you don’t expect, you will be ill-equipped to deal with it.

Where our interests lie, we will find the greatest joy. So, even if you’ve never invested in stocks before, as long as you choose the markets you’re interested in, your joy is what will sustain you when you’re losing trades. You will know how and want to find out and research what is happening in your chosen markets. Like all humans, knowing where to find answers reduces our frustration and adds to our ability to learn dynamically.

Futures are not new. They have existed in one form or another for hundreds of years. So, while they may be new to you, there’s no excuse for ignoring the vast amount of historical data and information that will help you learn from your mistakes. This becomes easier when you consider only a few markets that suit you and your trading style.

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