There’s a lot of opportunity going around when you area day trader looking to find the most profitable deals on your investment. Day traders can trade not only in stocks but also in futures and forex. But let us first examine the attributes each of stocks, futures, and forex.
Attributes of stocks
A stock as security stands for ownership in a corporation. It also stands for the stock owner’s claim on a portion of the corporation’s income and assets.
Any public traded company issues stocks.
While there’s no provision for leverage, there is a commission that must be paid to the broker. There are securities regulators all over the globe regulating th behaviour of stock trading through their control of stock exchanges. The latter are accountable to securities regulators. The liquidity varies across the board.
Taxes must be paid on stocks. The trader may pay long term or short term holding taxes. Of the financial instruments under discussion, only stocks entitle you to receive dividends. When it comes to the ease of taking a short trade, the results vary across stocks (but going long is definitely easier).
Attributes of futures:
A futures contract is basically an agreement to purchase/sell assets at a predetermined price, delivered and paid first a future date.
Shares and commodities can be found in a futures contract.
Wel known futures stem from commodities, primary examples being metals, grains, energy, etc. there are futures trading regulators in every important region of the world.
Leverages are available. The liquidity varies across futures. Ass far as taxation goes – Irrespective of the holding period length, 60% of gains are considered long term capital gains.40% are deemed short term capital gains.
There are no dividends on futures. In the case of futures, it is easy to take a short trade.
Attributes of Forex:
FX trading is the trade-in national currencies taht takes place in a global decentralised marketplace. The trade takes place in currency pairs.
Well-known currency pairs include EURUSD and USDJPY.
Leverages form a major attribute of FX trading.
As far as broker commissions go, there are none. Nevertheless, the ‘spread’ or the difference between the buying and selling price of the underlying asset, has to be paid to the broker. Despite its global nature, FX trading has no central world authority as a regulator. Rather, securities regulators are regional ion nature and the world is divided for regulation purposes into RMs or Regulated Markets. Some markets are more strictly regulated than others.
When it comes to liquidity, the FX markets are without peer. With over $ 6 trillion traded globally each day, liquidity touches the sky. The taxation regimen is the same as that for ordinary income. Dividends play no role here. Taking a short trade in currency pair trading is easy.
Now let us look at how day trading treats stocks, futures, and forex trading.
Day trading occurs when, in a margin account, there is buying/selling of the same security on the same day.
What happens when you day trade stocks?
Stocks make you the owner in a corporation, by virtue of ownership of ‘shares’. A pattern day trader does at least one trade per day. Besides market hours, there are the pre-market hours, wherein the traders have an opportunity to open trades much in advance. Trading is at its peak when volatility and volume are high.
The initial capital to initiate yourself into stock trading is rather a high vis a vis futures or forex trading. Also, trading at off-peak hours tends to be less rewarding, so that you must ensure your availability during peak trading.
What happens when you day trade futures?
You have futures to trade when it is agreed that you will buy/sell an asset at a predetermined price at a future date. You may bet on the market price movement direction. The flexibility of your futures trading is predicated upon the amount of capital you can invest.
There’s no minimum stipulated amount as a requirement to start futures trading. For starters, you could get the hang of a futures contract, and keep trading it for foreseeable future. If you have really cut your teeth at futures trading, you could go after futures that are experiencing prolific volume or movement on the trading day in question.
What happens when you day trade in Forex?
You invest in Forex trading after forming a reliable estimate of trends based on rate fluctuations. Given the risks involved, you should be ready to omit no more than 1% of your forex account on a single trade. Forex trades are open all day, all night. Since national currencies are involved, when you trade a particular currency pair is predicated upon market hours in the countries in the currency pair.
For instance, the EUR/USD by recommendation is traded between 9 am and 2 pm Eastern Time. FX day trading is not time-intensive either so that you can moonlight as a Forex trader whilst holding down your own office job.
The best day trading instruments:
Across the types of trading under discussion, the beginner should be able to recognise & choose instruments that fit the arena, market conditions and the idiosyncrasies of his particular project. We may first take a glimpse of the conditions affecting day trade:
High liquidity – Smooth buying/selling in large amounts;
High volatility – Volatility has a considerable role in product pricing;
Low transactional cost:
Low costs are the prerequisites of any day trading, which is why good brokers present us with staggering brokerage charges.
This enables the per unit trading cost to sink lower in proportion to trading volume rising higher;
Leverage or margin trading:
Leverage permits higher proportions of trade with relatively little capital. Leverage is a spine contributor to the high volumes of trading every day
News alerts enable the optimal use of chosen day trading instruments.
Keeping in mind the conditions aforementioned, we can now examine instruments at our disposal for day trading:
These are highly liquid, highly volatile, imply low transaction costs, and good returns due to high leverage.
Volatile stock futures:
The only caveat with regard to this popular category is that the list keeps changing so that traders should remain alert;
Crude oil or gold commodity futures are the pick of the day, any trading day. The category lends its well-deserved repute to diversification, becoming a prized asset in any portfolio
For short term day trading, FX instruments are prime candidates, offering high liquidity, high volatility, low transactional costs, as well as low funding prerequisites.
Being cognizant of his trading aims, the trader chooses any one of instruments such as forex futures, forex spot trading, forex options, besides FX binary options trading.
The promise of low contract size combined with possible high volume makes the following instruments ideal for beginners
owing to a low risk profile, bond futures present us with high leverage, high volume, high liquidity, as well as low transaction costs. Bond futures also promote diversification
Index-based ETFs: Exchange Traded Funds are low cost and highly liquid. These offer some of the best trades.
It is imperative that the trader choose his instrument after ensuring his own thorough knowledgeability of the same. There’s no sense in going after certain instruments just because they are in-trend.
Are you looking for a broker that can help you trade in futures ort stocks or crypto or maybe more than 300 of those? Don’t worry. Your search ends here. We present you with the leading online broker HFTrading.
HFTrading, with its headquarters in New Zealand, has since its founding in 2019 been making a lot of impact on the markets. Regulated by ASIC and FMA, it has the impeccable credentials to take your investments to new levels of profitability. The broker does not ask for payment of commissions – which says a lot about its commitment to transparency. The maximum leverage offered is 1:500.
Trading accounts you may begin with any one o the following as per your needs – silver account, gold account, and platinum account. The silver and gold accounts are geared towards beginners and competent traders. The platinum account is recommended if you really can be put into the ‘seasoned’ category. The latter is thus an affirmation of your competence having reached its peak. This account type has a dedicated accounts manager, as well as provision fo news alerts.
Ther broker has STP trading desk.
Deposit and withdrawal options are wide and varied, including and not limited to Neteller, Skrill, and Wire Transfer.
An array of tradable assets – currencies, crypto, commodities, stocks and indices – makes this broker of choice.
The trading platform is MT4, the leading trading platform par excellence.
Start trading today with $250 and follow trades on mobile or laptop.
FX, stocks, or futures: which one offers the best opportunities for profitable trade?
All three instruments – the stock, the futures contract, the currency pair – offer a wide range of trading possibilities. Each form of trading has its own attributes, analytical methods for trend evaluation, and a relationship with factors such as liquidity, volatility, regulation status, and leverage.
Whether you are risk-averse or not, plays a role in the choice of trading. Each form of trading has rewards (with attendant risks).
Take cognizance of your trading objectives, choose your trading plan, or simply jump into the fray with HFTrading. While working with the broker, it would be a good idea to ensure you understand the intricacies of trading yourself, too. It is your duty to yourself to keep on educating yourself. This would help you make informed decisions later on. Whether trading forex, futures, or stocks – the rewards far outweigh risks.