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Written By

James Barra

Written By

James Barra

James is an investment writer with a background in financial services. As a former management consultant, he has worked on major operational transformation programmes at prominent European banks. James authors, edits and fact-checks content for a series of investing websites.

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Edited By

Jemma Grist

Edited By

Jemma Grist

Jemma is a writer, editor and fact-checker focused on retail trading and investing. Jemma brings a unique perspective to the forex, stock, and cryptocurrency markets and works across several investment websites as a researcher and broker analyst.

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Fact Checked By

William Berg

Fact Checked By

William Berg

William contributes to several investment websites, leveraging his experience as a consultant for IPOs in the Nordic market and background providing localization for forex trading software. William has worked as a writer and fact-checker for a long row of financial publications.

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Updated

Jul 24, 2024

Which markets and assets best suit day trading? We explore the importance of volume, volatility and liquidity when choosing the right underlying markets to day trade. From forex, to stocks or cryptocurrency, we help you find the right trading market for you.

Before you start day trading in the financial markets you will have to decide where to focus your energy. Fortunately, advancements in technology have resulted in a diverse range of trading instruments now being available. This page will break down the main day trading markets, including forex, futures, options, and the stock market. It will cover their benefits and drawbacks, as well as look at which is the best day trading market for beginners. The information will help you decide which market best suits your individual circumstances, from lifestyle constraints to financial goals.

Stock Markets

The stock market remains one of the most popular types of online markets for day traders. Quite simply, you buy and sell shares of a company.

The allure is obvious, a straightforward trading vehicle and the chance to profit from some of the world’s most famous companies, from Amazon and Google to Shell and BP.

Plus, if you do opt for day trading the stock market, you have a number of huge indices to choose from, including:

• FTSE 100 – This contains one hundred of the largest companies listed on the London Stock Exchange.
• Dax 40 – This blue chip stock market index is formed of thirty major German companies listed on the Frankfurt Stock Exchange.
• Hang-Seng – The 50 constituent companies are ranked by market capitalisation and are listed on the Hong Kong Stock Exchange.
• NASDAQ Composite – Here you will find some of the world’s technology titans.
• S&P 500 – This lists five hundred of the most widely traded stocks in the US.
• Dow Jones Industrial Average – This index contains thirty of the largest and most influential companies in the US.

Due to its popularity, you can also now find a wealth of stock market trading courses and other resources online, from books and PDFs to stock market forums, blogs, and live screeners.

Key Considerations

Despite plenty of opportunities and trading with market statistics on your side, there is fierce competition in the major stock markets. In addition, if you were to trade in the US, for example, you could be required to hold a minimum of $25,000 in your trading account.

So, trading the stock market may not be the right choice for beginners with limited capital. Instead, you may be better off turning your attention to one of the different markets below.

However, if you want further guidance on day trading the stock market, see our stocks page.

Futures Markets

Futures are another one of the popular markets for day trading from home. A futures contract is an agreement between a buyer and a seller to conduct a particular trade at a specific date and price in the future.

As a day trader, you look to profit from price fluctuations between when the buy/sell contract is made and when the position is closed.

Often, futures contracts will centre around commodities, from precious metals, such as steel and aluminium to fats, foods, and oils.

The purpose of futures contracts is to mitigate unpredictability and risk. For example, if you knew you were going to produce one thousand litres of milk in a year’s time, you could sell it at the then market price. However, perhaps dairy-free milk will continue to surge in popularity over the next year and market price will fall. The solution – agree to sell the milk now at a pre-determined price so you can guarantee a certain degree of profit.

Trading in the financial futures market operates in a similar way. You are betting a particular index will hit a specific level at a certain point in the future.

Key Considerations

However, before you decide day trading the futures market is for you, there are some important factors to take into account:

• Capital – Although it requires less capital than trading stock markets, a few thousand dollars is still recommended as minimum starting capital. Although that will vary depending on the futures contracts you decide to trade. The S&P500, for example, will require between $3,500 to $5,000.
• Flexibility – Trading in the futures markets does promise some flexibility. However, official markets change dependant on the futures contract in question. So, you will need to ensure you are out of any positions before the close of trading for your particular contract. Premarket and post-market trading is available in the futures market though, as there is plenty of volume and volatility in the European, Asian, and US trading sessions.
• Narrow – Trading the stock market game promises a vast array of trading opportunities on numerous stocks. However, whilst some day traders follow volume and volatility, many trading in the futures market focus on one particular futures contract. So, if you want a diverse day trading experience, you may want to consider trading on different markets.

Overall, if you want to start trading in oil, energy and commodity markets, then futures may well appeal. Having said that, you will still need a reasonable amount of capital and to be prepared to possibly narrow your focus to just one or two particular futures contracts.

For further guidance, including strategy and top tips, see our futures page.

Forex Markets

The popularity of trading the currency markets has grown significantly in recent years. It is now the largest market in the world. Decide to delve into the forex space and you will attempt to turn a profit from price fluctuations in exchange rates. You will buy and sell currencies when you believe they will move either higher or lower in relation to other currencies.

Currencies are always traded in pairs. But despite a number of options, only some posses the liquidity and other characteristics you need to generate intraday profits.

Key Considerations

There are several attractive features to day trading in the forex market:

• Time – No need to worry about market opening hours, or trading when the market is closed, forex trading hours run 24/7. This makes it ideal for those looking to fit their trade activities around other commitments, or those who can only trade on the weekends.
• Minimal investment – Whilst the stock market can require tens of thousands of dollars, you can get involved in the currency markets with as little as $100-$1000.
• No commissions – With forex trading, you don’t normally pay a commission. Instead, brokers make their money through market trading quotes where you pay the spread.

However, currency markets do come with certain drawbacks:

• Trading on market volatility – Plenty are lured in by the flexibility of forex trading. The problem is, to generate substantial profits you are often still restricted to periods of high volatility and volume. Although dependant on the pair, the best time to trade the GBP/USD and EUR/USD, for example, is between 03:00 and 12:00 EST.
• Difficulty – It is a crowded marketplace with plenty of false market trading signals. Beginners are often recommended to stick to the GBP/USD or EUR/USD currency pairs. Both promise sufficient daily volume and price action.
• Leverage – Due to price fluctuations in the forex market being small, many traders turn to leverage to maximise profits. Whilst this can indeed bolster takings, it can also amplify losses.

Today the forex market is the most accessible market. It promises low barriers to entry, trading outside of US market hours, plus minimal initial investment. You can also benefit from free strategies, technicals, blogs, forums, videos and reviews, by simply heading online.

For further guidance on day trading in the currency markets, see our forex page.

Cryptocurrency Markets

Day trading today’s market is very different from just a decade ago. There is now a number of markets for cryptocurrency traders. But whilst rules, regulations and thorough risks assessments are yet to be completed, the popularity of the cryptocurrency day trade is undoubtedly on the rise.

These internet alt-coins promise high levels of volatility, making them ideal for intraday traders. There was a time when bitcoins were traded for pennies on the dollar. Now, however, each coin is traded at thousands of dollars.

It isn’t just the bitcoin market that offers day traders opportunities for profit. You can also day trade in the following popular digital currencies:

• Ethereum
• Litecoin
• Ripple
• Carando
• Stellar
• Dash

Key Considerations

But with well-established markets, such as stocks, why should you start day trading in the cryptocurrency market?

• Low cost – Whilst to trade on stocks can require thousands of dollars, you can get into the cryptocurrency markets with minimal capital. To start with, you can even get your hands on free bitcoin and litecoin. You also don’t have to pay to be a member of a platform, which can be the case with forex and futures markets.
• Volatility – Cryptocurrency markets are developing a reputation for huge price swings. There are ample opportunities to generate profits. However, these fluctuations also mean an increased risk of large losses.
• Accessibility – As market breadth increases, so does the software and equipment available for crypto day traders. Head online and you will find tutorial videos and a range of other educational resources to assist you. Also, you don’t need to worry about opening times or market holidays, you can day trade 24/7.
• Exchange risk – There is currently no clear market risk definition. However, if your exchange goes bust you could lose all of your capital. Often deposits held on exchanges are uninsured.
• Regulation – Whilst the world scrambles to regulate these emerging markets, there is a risk of falling victim to scam brokers. Not to mention unregulated markets can be manipulated with pumps and dumps, wash trading, plus spoofs.

If you are interested in technology and have an appetite for risk, then cryptocurrency markets may well be for you.

For guidance on charts, patterns, strategy, and brokers, see our cryptocurrency page.

Options Markets

Many platforms now offer trading in options markets. An option is a straightforward financial derivative. The contract gives you the right to buy or sell an asset during or within a pre-determined date (exercise date). As the seller, you have a legal obligation to meet the terms of the transaction. These will usually be to either sell or buy or if the buyer chooses to ‘exercise’ the option prior to the expiration date.

The advantage of options trading is that you do not have to own the underlying asset, which can often be far more expensive than a stock, for example.

Types

Despite having a reputation for being a risky instrument, there exist just two main classes of options:

• Put – This sell option enables you to sell at a certain price.
• Call – The buy option allows you to purchase at a particular price.

On top of that, there exist a long list of different capital, global, and emerging markets you can trade options in, although not all are appropriate for the day trade. These include:

• Stock options
• Index option
• Mini options
• Mini Index options
• Options on futures
• Weekly SPY options
• OEX options
• ETF options
• S&P 500 options
• Crude oil options

For further guidance on how to start day trading in the options market, see our options page.

Binary Options

Another interesting market comes in the form of binary options. Your job is to decide whether the underlying asset will finish above or below a particular price at a certain time.

These straightforward derivatives can now be traded on virtually any instrument or market. For example, you can trade binary options on commodity values, such as crude oil and aluminium. Alternatively, if you want to take a position on world-famous stocks, you can get binary options on Google, Tesla, and BP. Even forex markets and cryptocurrencies are on the binary options menu.

They appeal because they are an all or nothing trade. You know how much you will win or lose before you place the trade. So, if you want a straightforward market and instrument, plus access to global stocks with minimal capital, then binary options could be worth exploring.

For further information, including strategy, brokers, and top tips, see our binary options page.

CFD Markets

Despite being less well known in the list of trading markets, contracts for difference (CFDs) are an interesting proposition.

The straightforward definition – A CFD allows you to buy and sell on the rise and fall of a particular instrument. Where you entered and exited a trade is the actual contract for difference. This derivative based product is based on an underlying asset and your contract is with your broker.

But with so many domestic and foreign trading markets and financial instruments available, why do CFDs warrant your attention?

• Diversity – There are over 10,000 instruments to choose from with CFD investing, including currencies and commodities. Plus, it’s a growing industry, meaning market diversity will increase.
• Leverage – This could help you capitalise on opportunities, bolstering profits. However, there is also the risk of increased losses, so caution must be taken when using leverage.
• Flexibility – CFDs often have no expiry date, premium, or commission (dependant on your broker). On the downside though, you will often pay a larger bid/ask spread than in the physical market.

For more information on how investing in the markets with CFDs works, see our CFD page.

Choosing A Day Trading Market

Day trading the markets for a living is no easy feat, despite direct access to many markets with just an internet connection. The problem is, market structure, quality and characteristics vary hugely. So, the market you choose must depend on your individual circumstances, from financial resources and appetite for risk to availability and market knowledge.

There are also a few important factors to consider when you’re deciding on a trading market. These are:

Volatility

Day trading a volatile market is essential. Volatility is a measure of how much price will vary over a given time. The more price fluctuates, the more opportunity there is for you to profit from intraday movements.

Liquidity

Liquidity is concerned with your ability to buy and sell an instrument without affecting price levels. Markets with high liquidity mean you can trade numerous times a day, with ease.

Market Resources

If you don’t have an in-depth understanding of your market, then you need to consider the availability of resources. Where will you be able to go for market updates and to gauge day trading market sentiment?

Is trading data easily accessible online? If not, it is worth exploring what your broker can offer, trading volume charts, for example, can often prove useful.

Also, does the market your interested in have an array of day trading market news sources you can turn to? Let’s say you’re interested in commodities, does your broker have a gold trading market newsfeed where important daily moves will be explained?

Narrow Your Focus

Another common mistake some individuals make is to try their hand at a number of different markets at the same time. Each market has their own nuances and complexities that require significant attention. So, you should focus on one market and master it. Then if you can generate consistent profits and you want to explore others markets, you can do.

So, don’t just start trading random overseas markets. A careful and calculated decision will often benefit you in the long run.

Demo Account

Whichever market you opt for, start day trading with a demo account first. This will enable you to get some invaluable practice before you put real capital on the line. You can get to grips with analytics, practice trading in bearish markets, choppy markets, and learn all the basics. It’s also an effective way to test drive a broker. 

Algorithm Capabilities

You may also want to consider whether you will be able to employ automated algorithmic trading to increase market efficiency and capitalise on volatility. A constantly profitable strategy can often be programmed into an automated trading system.

These algorithms can be used for trading ranging markets, with market internals and capitalising on market cycles. You simply enter your parameters and then let your trading bot do the heavy lifting.

Final Word

Above some of the best day trading markets have been broken down. As you can see, today you have a wide range to choose from. This means if you cannot generate profits in one of these markets, you can always try another.

However, before you decide, consider your financial circumstances, market knowledge, availability, and your risk tolerance. This will help you decide which of the above markets you would be best suited to. Also, utilise the array of online market trading guides, resources and websites available. All may enhance your overall performance.

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