Hi, I'm starting to search for new markets to trade that can offer uncorrelated (as much as possible) opportunities relative to equities for a small trader. I'd really appreciate suggestions on where I can start looking. I'm a stock swing trader slowly growing a small account 12K x margin with my goal not so much to rake in money but to refine my trading as I slowly grow my account. I trade small positions limiting most trades to around 4% of the portfolio. I keep my losses small in the 5% range. My typical trade right now is in the $1000-1500 range so small.. I do very well on the long side buying weakness. My losses come from the short side when I feel we're at the upper end a SPX range and I look for weak stocks to short. As we're in a bull market and I don't like to fight the trend I'm looking to minimize shorting and increase my investments by finding new markets that have little or inverse correlation to equities. So I can do what I do best.. Buy weakness and ride the trend.. I'm starting to peek into the world of futures, options and forex. My first impression from futures is that considering my small account and small appetite for losses that market may be out of reach for now. Is this a correct view? Are there other markets out there that a small trader like me can look to? Or is it best to stick to stocks and ETFs for now? Trading across multiple markets is a goal and there's a lot out there so I'd appreciate any input. Thank you in advance and happy trading!!!!! AirborneTrader
With your account size and position sizing, maybe sector ETFs are worth a look. Over weight this sector, under weight that sector & play the correlation or lack of. Maybe outright short a sector if you're feeling courageous.
You need to change the title of the thread to : Looking for new markets beyond equities to INCREASE risk. Futures? Options? Forex?
============== GLD,study, study SLV, real estate maybe; as far as futs, options, that a whole different deal. Leverage can be a real killer; cash markets can be kinder, can trend better. Wisdom is profitable to direct
To filter the etf world ( over a thousand of them with at least some liquidity for SWING Trading) think about what you want to look for/at. An outline/structure/plan might include the following for a home gamer/trader. Sort of a global macro theme. Who knows, you may beat a hedge fund. Commodities: energies, metals, grains, softs Fixed income: US government, curve trade etfs, US corporate, US muni, emerging. Currencies: US, Canada, Australia, Europe, Japan. Country specific stock markets: large selection of major world markets. Sectors: 8 US sectors and some specialties. You could follow these asset classes followimg around 50 etfs. Position sizes on future contracts do not seem to presently fit into your plan ( even little oil euro and yen ) are in the $50,000 and above position size. Liquidity in some etfs is an issue but not so much swing tradimg. Look at a chart and volume in your time frame and decide if it is ok. I wont comment on options.
You should be trading FX. Especially the cross rates. For one, it will get you out of this "bull market" mindset as there is no such thing in FX land. And two, trading FX will give you a better handle on the macro picture and what's going on in the economy.
I dunno Mav. There's a lot of funny business in the fx world. Insane leverage, poor funding rates, and every customer pays the spread. But great to be a broker, I'd imagine.
Disregard all that. All a bunch of bs. Don't use the leverage and trade longer term, spreads don't matter. There is no more funny business here then in any other market.
Futures increase risk? Futures are very liquid, not prone to halts or special announcements. Trade margins are very low, that frees up capital for other investments. Leverage does not increase risk. If you buy long a contract of Gold. Margin is 8K but your buying approximately $130,000 of gold. You need to remember you are risking 130k not 8k. The daily dollar range for futures is no more then the daily dollar range for stocks