If you are looking for a market that is best suited to beginner traders then there are a few things you must keep in mind. Many people that are new to trading assume that the more volatile and active a market is the greater the chance that they will be able to make a profit. While volatility is important it can actually do more harm than good and can turn a winning trade into a losing one in the blink of an eye. Which kind of markets are suitable for beginners? Markets that are not overly volatile and show a tendency to trend are the markets where beginners have the best chance of learning how to trade and make a profit in the long run.

Volatility is something that you should avoid unless you are extremely experienced. The reason why volatility is not favorable is because it can turn a profitable trade into a negative one in a matter of seconds. Most people only think of the positive effects of volatility and that you can make a killing if you open a trade in the same direction that the market goes. However, many people completely forget the fact that there is just as good a chance that price could move against you and wipe out your position and your account. This is not to say that you should trade markets that are flat and do not move or hardly show any kind of movement. The best kind of market to trade is one that is heavily traded as this means the market moves in fluid motions. There is no erratic movement or behaviour and if price does go against you there is enough time to manage and close out your position and lock in profits.

The other thing you should look for in a market is that it has a tendency to trend. Trending and the level of volatility in a market are not the same thing. Markets can do one of three things: trend up, trend down or go sideways. While it is true that markets spend a large portion of their time going sideways and consolidating before they continue with the trend, the important thing here to look for in a market is that you can see price does actually move in a trend like fashion. The best way to do this is to open up a daily chart and have a look at the last six months of price action. Is it clear that price has trended up or down or does it look as though price has done nothing for the last six months? Markets that trend are crucial because the presence of a trend makes it possible for traders to take chunks out of the market as price moves up and down over time.

It doesn’t matter if you trade stocks, the forex market or precious metals. Any market that possesses both of the above traits is one that a beginner stands the best chance of mastering. Learning how to trade successfully and profitability takes time, so it is in your best interest to stack the odds in your favor by finding a market where you have the trading edge you need to win.

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Category: Finances
Keywords: swing trading, swing trading indicators, forex trading