Day Trading Newbie Lessons learnt

[MrDavid]

Just started trading a bit with IC Markets using MT4 and seems pretty good platform, alot different operations to Plus500. It seems a bit more difficult to see you margin and your required amount per trade... probably just take some getting use to.

 

[lawnmower79]

Another candidate who was baptised by fire here chiming in:

Stocks I say would be the easiest to trade in. This is because it is usually driven by the underlying market move. If the ASX went up 50 points today your average stock pick *should* go up, providing you're at least a little familiar with what the company is, what it does and looked at a few recent articles about it. With individual companies it is also easier because a company can be valued to an extent based on its balance sheet, earnings reports, earnings forecast, P/E ratio etc. The market usually won't pay $20 million for a company that's only worth $10 million on paper. There are company fundamentals you can look at. Also, the majority of the players in a particular stock market is usually limited to the country of that stock market, yes there are also international players but the Australian stock exchange is quite small compared to a bigger exchange such as the U.S.

Forex however, is much harder. There are much more players from all over the world trading all sorts of currency pairs at any given time. Forex is also influenced by the actions of 2 countries, for example if you trade the AUD/USD pair, the events in Australia affecting the AUD and the events in the U.S. affecting the USD will both come into play. Also, you cannot value a currency like you value a company, based on balance sheets and P/E ratios. Hence, it's best suited to seasoned traders and requires a lot more charting skills, especially with intraday trading.

Commodities is an even harder market to trade in. Commodities exist globally and although the U.S. futures market dictate a lot of the price movement through ETFs/ETCs, it can be affected by demand/supply factors in other key countries around the world as well. Among the different commodities, Gold is one of the hardest markets to trade in. Gold is determined by many factors such as sentiment (since it's regarded as a "safe haven" asset), inflation, supply/demand, ETFs and ETCs moving the market price, possibilities of war, financial collapse, currency collapse, etc. - many many factors affect this yellow stuff. Also the number of players with this yellow stuff around the world is enormous. Many central banks around the world also have stockpiles of this stuff and sometimes they get moved around. That's why gold price is often talked about as its movement is linked to a lot of other areas of the market as well.

Despite all of this, I'm still in the game. I've learnt some lessons the hard way and now limit myself mostly to stocks only. Also close stops are not as good as it seems - many times I could've made a profit because I had the direction right but instead got washed out by my own stops because of volatility. You live and learn, I guess.

All the best with your trading David and don't give up!