Which Markets Can Be Day Traded?

Popular day trading markets, and which to trade

the NYSE a popular market for day traders
The stock exchange is one of the popular day trading markets. FrankvandenBergh/Getty Images

The main day trading markets are futures, forex, and the stock market. The options market is also popular, although more so with swing traders (traders who hold positions for day or weeks, not minutes like a day trader). Most people are aware of the stock market; futures and forex are less well known, but can also be day traded. Here is brief rundown on each day trading market. 

Day Trading Markets

The stock market is what most people think of for day trading.

It is a great day trading market, where day traders buy and sell shares of a company, exiting all positions before the close of trade at 4 PM EST (opens at 9:30 AM EST, but you can also make trades before this in the "pre-market"). 

To day trade stocks in the US you need to maintain an equity balance in your account of $25,000 at all times. If you drop below that amount, you can't day trade. Recommended starting capital is at least $30,000.

Futures markets are another popular day trading market. Futures are an agreement between a buyer and seller to buy/sell a certain amount of an underlying asset at a future date. Day traders make money on the price fluctuations between when they buy/sell a contract and when they close the position (before the end of the day).  

You can start trading futures with much less capital than stocks. $3500 to $5000 will get you started day trading S&P 500 Emini (ES) contracts (one of the best futures contracts for day trading).

Official market hours vary by the futures contract being traded, so you need to watch to make sure you are out of your positions before the close of trading for your contract. 

The forex market is the most accessible market, mainly because traders can get started with as little as $100 with some brokers, although starting with at least $500 or $1000 is recommended.

The forex market is where one global currency is exchanged for another. For example, the USD/CAD price represents how many Canadian dollars it takes to buy a US dollar...and that price is constantly fluctuating. Day traders buy and sell currencies they believe will move higher or lower relative to other currencies, making money (hopefully) on the price changes. 

Choosing a Day Trading Market

Which markets you choose to trade will depend upon several factors, including your financial position, your trading system, your personality and your interests. Your finances are a good place to start. If you don't have at least $25,000 you can't day trade stocks, unless you save up more capital. If you have ample capital, then stocks, forex or futures are all great day trading markets. Is there one which interests you most? Certain strategies may also work better in certain markets, or at a certain time of day. Therefore, if you already have a strategy in mind (or have researched trading strategies).

Pick one market and focus on it. As a new trader don't flip back and forth between markets, as this isn't an efficient way to learn.

Final Word on Day Trading Markets

Stocks, forex and futures are the main day trading markets. All are great markets, and one isn't necessarily better than another. Based on personal circumstance and interests though, one market may appeal to you more. Focus on one market before learning others, as you will find that you have to fine-tune your day trading strategies to each market, so constantly switching markets when you are starting out is not an efficient use of time. 

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