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Many people want to get started with short term trading, but what they don’t know is that you can’t just jump right in and expect to be successful. There are many pieces of information that are necessary for success. And although some of them might seem like common sense, this is often overlooked because they can be deemed as “too simple.” Instead, what a lot of people do is to jump right to more advanced topics like strategy. Strategy is important for sure, but it’s not the first thing you should be focused upon.
Instead, familiarize yourself with the basics, master them, and then form a more complex strategy around them. This will take you much further down the road of creating a highly profitable trading career.
Let’s take a look at some of the things that you will need to master before you focus on finalizing a strategy.
Trading Hours
There are certain hours that certain assets are traded during. If you aren’t available to trade during those times, you will have difficulty getting started. For example, the U.S. stock market is open from 9:30 am to 4:00 pm on Monday through Friday, Eastern Time. Trading stocks and indices outside of those hours is possible, but very difficult, especially if you are trying to do so over the short term. The margin of error goes up at a very high rate.
Trading the U.S. dollar during these hours is possible, too. However, there are other currencies out there, and knowing when these are traded the most will give you an advantage. The three biggest currencies besides the dollar are the euro, the Japanese yen, and the pound sterling, out of Great Britain. The euro and the pound are traded during European trading hours, usually ranging from 9:00 am to 5:00 pm, or 3:00 am to 11:00 am in New York City. Tokyo’s trading hours are even more inconvenient if you live in the United States. Those start at 8:00 pm the night before. These are the peak currency trading hours, as they are when the most people are trading, and thus prices move the most quickly. Commodity hours tend to be similar, depending on the time of year.
National Markets
Most people don’t begin to realize that they might be trading in another nation before they begin. At that point, it can already be very inconvenient. The internet has made our world seem very small, but that doesn’t mean it really is. Instead, if you are trading the USD/JPY pair, but it is not during peak hours in New York or Tokyo, you will be struggling because these currencies don’t move as quickly during European hours. Knowing which markets to trade in will help you to speed things up with your learning process. It will also help you to keep focused.
This is especially true of stock trading. It is possible for a U.S. based trader to trade European stocks, or vice versa, but this can be tough to set up. Trading with binary options mak