In today’s episode, you’ll discover the best market to trade for beginners.
So tune in right now…
Hey, hey, what’s up my friend?
Welcome back to today’s episode where I’ll be discussing the best market to trade for beginners.
Here’s the thing, the word best is subjective. What do you mean by best? It could be the best market for learning purposes, it could be the best market for you to not lose your pants. How do you define best?
So for today’s episode, I’ll tackle it from these two perspectives:
- The best market for learning purposes
- The best market for you to not lose your pants
Let’s get into it.
The best market for learning purposes
In my opinion, the forex market is the best market to learn how to trade and there are a few reasons for it.
1. The forex market allows you to easily switch between timeframes
You can easily switch between the 5-minute, the 15-minute, the 30-minute, or the daily timeframe. It’s as easy as clapping your hands.
Whereas if you trade stocks, you don’t have easy access to lower timeframes, like the 5-minutes or the 15-minutes. Yes, you have, but you’ll have to pay for the data feed. So in a sense, forex markets allow you to trade across timeframes fluidly.
The benefit of this is that you can go down to a lower timeframe and see how the price action unfolds itself. You can see more uptrends or downtrends, parabolic moves, or even range markets.
Your learning curve is smoother because you can see more of this type of behaviour when you’re trading of the lower timeframe. Things happen faster compared to trading on markets where you only have access to the daily or weekly timeframe where things move much slower.
So your screen time or chart time wouldn’t be as much compared to a trader who trades forex, as he can access the lower timeframe to see how markets go up and down and practice their technical analysis skills and stuff like that.
That’s the first benefit of a forex trading.
2. Forex trading allows you to trade nano-lots
You can trade in a much smaller amount to suit your risk profile. Let’s say, for example, you have $1,000 trading account, and you want to risk 1% on each trade, that’s about $10 on each trade, which you can’t achieve for stocks.
Because if you buy a stock that is, let’s say $50, it’s quite difficult to make sure that your loss is only $10 on the trade, unless you can buy exactly one stock.
Whereas for forex, on the other hand, you can play with the position size because most of the time you are trading with the market maker and you can trade almost any position size that you want, be it 500 units, 700 units, 1000 units, it’s up to you.
So that allows you to practice proper position sizing and risk management.
And this brings me to my third point…
3. Forex trading provides easy access to leverage
When you are trading forex, more often than not, to make money you’ll have to use leverage. You can easily access 1 to 21, 1 to 50 leverage or even 1 to 200.
This is something that you don’t readily get on other instruments. In the forex markets, you can have easy access to leverage, and that trains you to apply proper risk management, position-sizing, how to use a stop loss and stuff like that.
So that’s a benefit, of learning how to trade forex, which will speed up your learning.
This brings me to the other perspective…
The best market for you to not lose your pants
In my opinion, that would be the stock markets. Why is that?
1. Stock markets are mostly unleveraged
So you can just simply buy stocks, you don’t have to use leverage. Unlike forex where you most likely have to use leverage. For stocks, you don’t have to unless you want to. So there’s a difference there.
When you trade stocks without leverage, the most that you can lose is the money that you put into your stock trading account. If it goes to zero, that’s the most you can lose.
2. Stocks are easier to understand
You’ll probably know what a stock is, what’s the company and how they make their money and stuff like that.
But when you’re trading forex, it’s quite hard to figure out why is the Euro going up, or why is the US dollar going down.
So it depends what you want, if you want to learn more about trading, then you can look into forex. Although there’s risk involved, it will speed up your learning curve because there’re so many things to learn.
Or if you want something more conservative and safer, then you can look at stocks where it’s mainly unleveraged, and something that you probably understand.
I hope you got something out of this episode. With that said, I wish you good luck and good trading. I’ll talk to you soon.