The best Markets for Day Trading

Which markets and financial products are best suited for day trading? – If you are looking for the right answers to these questions, then this page is the right place for you! With more than 7 years of experience in the financial markets I will explain to you which markets are best suited for trading. By choosing the right market you can secure advantages as a daytrader and achieve a higher profit. Inform yourself in detail.

Liquid Markets are suitable for Day Trading

Liquid markets are best suited for trading. In the following lines I will explain why this is so and how to find liquid markets. Liquidity shows the level of supply and demand on the market. For example, there are markets that are traded very little overall. The trading volume is low because there is little interest. As a result, liquidity is also low. Other markets, on the other hand, have a very high trading volume and liquidity is very high.

Liquidity can also be seen directly in the order book. In my use, I distinguish between “thick” and “thin” markets. Thick markets and thin markets have different characteristics, which I will now show you.

Advantages of high liquidity:

  • Trading fees are lower
  • The spread is smaller for Forex and CFD trading
  • There is no slippage (poor price execution due to lack of liquidity)
  • The markets are moving more slowly
  • There are fewer false signals

Disadvantage of low liquidity:

  • Higher trading fees
  • The dispersion is higher
  • Slip can occur
  • You cannot open large positions simultaneously
  • The market often makes jagged and fast movements in a few seconds

“LIQUIDITY” DESCRIBES HOW MUCH SUPPLY AND DEMAND IS AVAILABLE ON THE LIMITS IN THE ORDER BOOK. HOW MANY CONTRACTS DO YOU WISH TO TRADE?”

Example: Comparison Dax and S&P500

The Dax is the German stock index and the S&P500 is the American one. There is a very large difference between these markets in the futures contract (future). The Dax is much thinner than the S&P500. In the S&P500 there are often more than 1000 contracts on the BID or ASK in the order book. In the Dax, however, the order book looks different. Here a maximum of 10 – 50 contracts are traded from my experience. Sometimes there are even prices that are not traded at all and the market jumps.

For day traders it is much better to trade the S&P500. Moreover, these thin markets tend to attract algorithms. Liquidity has a very strong influence on market movements. Imagine that: You want to buy 20 contracts on the Dax. But in the order book, only 4 are available on the ASK. Now you move the market yourself by a few ticks and get a worse execution.

Which markets are suitable for day trading:

In the following key points I will give you a good overview of the best markets for traders. The reference in the previous text should be understood. The most traded markets are best suited for day trading.

Forex:

Currency pairs in conjunction with the USD and EUR are suitable.

  • EUR/USD
  • USD/JPY
  • USD/CAD
  • GBP/USD
  • EUR/GBP
  • AUD/USD….

Stock Indices:

Larger stock indices with high market capitalization are suitable.

  • S&P500
  • DOVJONES30
  • EUROSTOXX50
  • JP225

Raw materials/metals:

  • OIL
  • COPPER
  • SILVER
  • GOLD
  • SILVER
  • SOYOONS
  • WHITE
  • COFFEE

Government bonds:

  • Are generally very liquid.

With this list, you already have a very large selection of markets. A daytrader observes in most cases only 1 – 2 markets and focuses on them.

Which financial products are suitable for day trading?

The choice of products always depends on the capital strength. Generally it can be said that day trading is possible with any initial capital. Day trading can also be simulated free of charge in the demo account. Simulate the trade yourself and decide in the end which financial product suits you best.

Forex: The currency market is very liquid and you can trade with both small and large capital. The position sizes can be optimally divided and you get easy access to these markets via an online broker.

CFD (contracts for difference): They are also suitable for small and large capital. Contracts for Difference (CFDs) are offered by the broker on a wide range of markets. You can trade commodities, currencies, stocks and more. Trading fees are also lowest in the most liquid markets.
Options and certificates: They are suitable for medium capital. The execution of the financial product is always important here. Therefore you should inform yourself in detail before trading.

Futures contracts: Futures are best suited for day trading. The trading fees are very low and trading is transparent on the exchange. However, one needs higher capital of several thousand Euros, because the position sizes are already very high by default.

In summary, I believe that Forex and CFDs are best suited for beginners. The risk can be kept manageable and one can start with small position sizes for the first time. You can also use a free demo account to test trading.

Recommended providers:
The selection of a provider for stock exchange trading is not always easy. Particularly due to the large amount of information on the Internet and false advertising promises, beginners fall for false offers. In my 5 years of experience on the markets I have experienced many things and tested different providers.

A good provider is characterized for day trading by the following criteria:

  • Regulation and license
  • Very fast execution of trades
  • A wide range of markets
  • Professional German support
  • Favourable trading fees
  • No hidden costs
  • Free demo account

In the table below you see my top 3 suppliers. Test them yourself in the demo account. A change can be worthwhile and save fees:

Conclusion: The best daytrading markets and products

After reading this page you should now know which markets and products are suitable for you. The liquidity of a market has a very important influence on the movements and behaviour of the market. High liquidity is always better and is reflected in the most traded markets.

Day trading also works with any size of capital thanks to sophisticated financial products. So it is possible for anyone to carry out day trading.

Good luck with trading!


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