Trading More Markets Can Mean More Money
Futures; Chicago › Vol. 34 Nbr. 3, February 2005
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Summary
One advantage of trading one well-known market is one may develop intimate knowledge of its particular trading rhythms and a gain a sense of how it moves and reacts in certain circumstances. A disadvantage would be that overstudying a market conveys a false sense of thinking that because one "knows" the market, one will "know" what it will do next. This leads to a dangerous false confidence. The point is not to discover which way is better or to find the exact number of markets a small trader should trade for optimal success. Instead, it is to show that by following multiple markets, a trader can increase the number of opportunities made available, thereby catching more trades and more profits. There are certain markets that are considered to be suitable for smaller traders. Markets that trend well and are highly liquid include corn, soybeans and wheat. Focusing on a fewer markets leaves one with fewer opportunities and longer waiting periods in between trades.
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Trading More Markets Can Mean More Money
One of the big questions for traders is whether it is better to trade a small number of markets with some measure of expertise or a large number of markets with no more than a general sense of how they work. This is especially difficult for novice traders who are likely risking limited capital but want to see profits right away and do not want to be stuck in trendless markets. Smaller traders - those with less than $10,000 in their accounts - must take particular care in this decision.
One advantage of trading one well-known market is you may develop intimate knowledge of its particular t...See the full content of this document
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