How many markets should you trade/specialise?

[Creech]

Just wondering how many markets you should trade in? For example, was thinking of trading futures in e-mini dow, possibly FTSE, and FX futures i.e. USD/GBP. Is this too much? Should i just specialise and formalise my strategy in one market?

Many thanks.

 

[Skimbleshanks]

I would suggest that it depends on your level of expertise. If you are relatively new, I would suggest you trade only one market. That's because it takes a long time to 'know' a market; it's intricacies, personality, and how it correlates with other markets, and how it is affected by news, etc. So you find out what works on that market, and trade it.

It is not always true that what applies to one market will automatically apply to another - each is a different animal, and needs to be treated as such.

I learnt on one market, and because I am now so familiar with it, it is quite easy for me to trade other markets. Looking back I would do the same thing again.

 

[Creech]

Thanks very much Skimbleshanks. I was thinking that but was quite unsure. I will do that and just trade in the DOW for the begining. Makes alot more sense!

 

[Skimbleshanks]

I started daytrading on the Dow, and really got to know it over two years. That was when I was spreadbetting the Dow cash.

I then moved onto direct access and emini S&P futures (ES), and I found the transition not too difficult. Not easy, mind, but not that difficult either - it just took time.

And now I am so used to seeing the two work together, that I can take signals off either for trading. So I can look at the Dow chart and trade ES, and look at ES and trade the Dow - not that I'm recommending anyone do this.

I find that I can now look at forex and stocks, and with a very short learning curve (five minutes maximum) I can suss out its characteristics and personality, and so be confident in trading it. I can only do this because of the very long learning curve (two years) I spent absorbing all the little nuances of one market and therefore knowing what to look for in a new market.

But my trading is probably very different to everyone else's.

 

[TWI]

If you are trying to day trade I believe it makes sense to look at a number of correlated markets in order to trade one. For example if trading Interest Rates it is a good idea to look at at least other duration interest rate products but I also always have Stock Indices and FX up. You will find that although switching around over time generally you can find a leading indicator out of the group.
This goes without saying if trading spreads.

 

[JTrader]

Hi Creech

I think that to a large extent it depend upon an individual traders ability, aptitude and mental capacity for retaining knowledge about several instruments at the same time.

I like to keep things as simple and streamlined as is possible, keeping mental baggage to a minimum. Therefore at present I only trade forex and I only trade EUR/USD.

For me, specialising in one instrument suits my personality, aptitude and capabilities. If I were to try and spread my resources across several instruments or markets I believe my knowledge of each would be reduced and my trading would suffer.

However, I am sure that more gifted individuals can easily cope with more information to manage.


Thanks

jtrader.

 

[Creech]

Thanks all for your advice. I think i will start with the DOW and wait till im more confident and experienced before i move onto other markets/instruments. I will still keep an eye out for correlations between markets so i can learn and spot movements. Once im more confident and experienced then ill start to "spread my resources" across other areas.

Once again, thanks!