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Understanding the Financial Markets | Making of a Day Trader

Understanding the Financial Markets





Full Transcript

How to be a Successful Day Trader? What should I trade? This is Marina. Yeah, I thought, oh, the trader chick. And right now we’re going to go successful day trade. The four major markets. That people that traders usually focus on to trade. There is quite a few financial markets. Actually there is a huge list.

But what we want to focus on is the four major ones, the ones that are the most popular, the ones that are the most traded, because you also want volatility when you trade. OK. So let’s focus on the four major one.

So none of these are in order. They’re actually pretty much treated equally. I would say twenty-five percent. You know, each obviously it’s a lot different.

You know, there might be a little bit more here, a little bit more there. However, overall, these are the four largest ones. So right now, we’re going to be focusing on forex.

What exactly is forex? Forex is literally just a foreign exchange. Right. And it is classified as currencies and.

Basically, the easiest way to explain it is you take one global currency and police say it against another global currency and you want to see the difference.

So, for instance, let’s say we’re doing the USD, right. The United States dollar and you want to put it against the euro. OK. So whatever the euro is right now, I don’t know, maybe, let’s say 1 0 six dollars to one euro. And you are betting on let’s say that there is a lot of. Issues going on in Europe that the euro is going to lose strength. Right. So what you’re going to your focus is. OK. I am saying that the US dollar is going to gain strength.

Over the euro. So, for instance, if you are, you know, right now at 1 0 6, you’re saying, OK, I’m gonna get in right now and I’m saying that the euro is going to be at 1 0 3.

And that’s when I’m going to get out. This is a very general way of explaining what the forex market is, but you kind of get the idea or the same as the US dollar versus the yen. And you’re saying that the yen is going to go up in price and weaken the dollar. This is completely hypothetical. I don’t actually do forex, so I don’t know the market that well. So you’re saying that it’s going to gain strength and you’re going in at a lower price to get out at a higher price? I’m going to go over this a lot more in my beginners bootcamp for deterring, so I’m hoping you could join us there.

But this is basically like the gist of what forex is.

The great thing about forex is it is the only market that is literally traded 24 hours a day with similar volatility levels.

The next market. Looks. Sorry about that. Futures markets, another way of knowing futures easily is commodities.

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Financial Markets

That’s how it began. The futures market began as a commodities market where, for instance, you want to go and buy a barrel of oil today. But you’re saying that in three months, usually the futures markets are all on contracts and are usually three month contracts that in three months today you’re buying the barrel at, let’s say, forty five dollars in three months. You’re saying that it’s going to be up around forty eight dollars, right. So if you buy 10 barrels, you know, you can make up to 30 bucks. This is a very, very, very general way of looking at things.

This is how it began. Not only with oil, but it was also with cotton. It helped. It was helping out the farmers place a better price on what they want their product to be in the future, which is a market.

This was, you know, ages ago, over a century and a half ago, when the futures market came about because of this to help the farmers out with the contracts. You know, they’re saying that they’re going to have corn today. The corn costs whatever barrel. But in three months, by the time they reach, you know, they’re.

Harvest it’s going to cost this much, it’s speculation. They don’t know. That’s the truth. But that’s how the futures market began. Today, the futures market is much more than just.

Physical commodities, right? You could trade the indexes, which have now actually become the biggest financial instrument to be traded all over the world. And it is the E s mini, which is the S&P 500.

Index, which is actually U. S 500 U stop corporations. So the best time to trade that particular instrument is from 930 a.m. to 4:00 p.m. Eastern Time. However, the futures market has a lot more, but it’s not as smooth as the ESM mini. OK. So this is, again, very general.

I go over much more in detail what the futures market is and how to be able to trade it. Also, it’s one of the lowest entries as far as an investment for how much you need to put up with your broker. I go over this a lot more in my beginner’s Bootcamp for day trading, where you will learn how to be a successful day trader.

I’m hoping you will go into that with us more. And then you could decide exactly what is the best financial market for you to trade. It’s very important for you when you do decide to finally trade, even though what I’m going to be teaching is the market movements, how the market moves that is universal.

However, you do need to know your market. All the markets move completely differently. The patterns and the indications are similar. However, you need to understand what’s going on. So that’s why it is crucial for you to get clarity on what you want to focus on.

For instance, if you want to focus futures. OK, great. You want to focus futures. I personally only focus on the ES Mini. You need to decide, you need to figure out what you want to focus on when you are in the future. Do you want crude? Do you want. Yes, many. Do you want to. Russell You know, you need to focus on that. The same with Forex. A lot of people only choose one pair to work with.

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Maybe the US versus the euro or you know, the US vs. the yen. You will decide, right? Again, you need to study your markets. So the next market that is treated equally and of course, the one that is most popularly known. Instance, if anybody ever says.

Oh, you’re a day trader. Oh, what stocks do you trade? They don’t realize that it’s only probably 25 percent of the world that trades stocks. Right. So stocks is a share of a company, right?

You could buy a share of an Apple share. Disney did get shares of much lower, less companies. And your goal is to see them either go up in price or go down in price. Right. That will depend again on how you want to focus on the market or how you want to focus on those particular positions that you are planning on trading. Right. Again. I go over this a lot more in the Beginners Bootcamp. So you really get an idea right now. I just want to introduce to you the four major markets that people trade so you could start to get an idea of what is out there.

So stocks I personally don’t trade stocks for several reasons, because, one, you need a lot more money to enter the stock market because.

As in with futures or Forex, you just put in a certain amount for the trade, you go and you need usually about 500 to start your account. I recommend about two thousand dollars with stocks. A lot of brokers will tell you is 500 bucks. That’s a lot. It was five dollars. Just think of it.

You want to trade apples, right? You’re saying, OK, Apple is either going to is going to go up for you know, right now their earnings are great, is going to go up. Apple is 100 bucks a share.

What are you going to get with 500 dollars? Right. So that’s the thing with stocks. You need to invest a lot more money to see profits.

There is a thing called penny stocks. If you plan on doing stocks in penny stocks, it’s a very different market as in stocks. Again.

The movement, the reversal patterns, the indications, the trends, they are all the same. Universal. When we are done with this mini course.

And if you continue with the boot camp, you will be able to read any market as far as what the market tells you, but you will need to be studying each market separately.

So as with stocks in particular, including penny stocks, there is a lot of research that needs to be done. Each stock has a totally different. News characteristic, it has many different things that are going on with it at the moment, right, so you need to be up to date with that. That’s another reason I’m not crazy about stocks is too much research.

Not the same with features. You don’t need that much research at all. And Forex, you could just focus on that particular thing. So stocks, you usually if you do trade, you should probably be focusing on 10 to 15 different stocks to trade. Penny stocks is also a totally different market. So these are the two different things. Penny stocks obviously don’t need as much money, but it is different. Way of doing it again.

Same thing with the move trends, indicators, but it’s a different research pattern, right? So that’s something you need to think about. And the last major market is options.

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So options allows you to enter the stock market itself at a much lower price range, because what you’re actually doing is you’re buying contracts on the stocks. It’s a little bit more complicated.

And you definitely will need to really understand options before you get into them. They work very differently. As far as entries and exits, as the rest of three markets that I just mentioned, however, you could follow the flow of the movements of the market and understand what will be happening the same way.

But you do need to understand that exact art. I would say of each of the following markets now and you start to trade again.

I will say this again. You will need clarity. Trading, as we just discussed before, is not investing right. So with investments, we are constantly told you need diversity. Diversity builds up on your portfolio.

The exact opposite when you trade because of diversity in the long run. Excellent. All right. Don’t put all your eggs in one basket with trading.

But you want to know exactly what your particular market is going to be doing that day, that hour. So if you have too many things going on.

You can’t focus that laser way, right? So this should give you a good idea of what the four markets are.

Again, I really will go over each one a lot more in detail in the Beginners Bootcamp. So you really get an idea right now. I just want you to know what those four major markets are.

If you have any questions, please shoot away. I’m sure many other people have the same questions and I’ll be happy to answer them as much as I can. And have a great day.

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Understanding the Financial Markets