Options, Futures, Forex Trading - which is gd for beginner?

Question

What type of trading is good for a begineer, who knows nuts about trading? Also have cashflow constraint, but want to earn more money?

Answer 1

Howard and Anywhere are partly right. Yes, options futures and forex do possess a lot of risk, but so do stocks and bonds. Let me ask you something if you lost $10,000 in stocks and $10,000 in forex, which one is riskier? Both are just as risky because you lost the same amount of money. It's just that in options, futures and forex, you can lose it alot faster.

The fact that Howard lost money in forex and makes money in stocks doesn't mean stocks are better than forex. It's just that he's better at stock trading then forex trading. I know people that did well at stock tading and went to trading futures or forex and they're profits took off like a rocket. They were much better suited for those kinds of investments.

For me, I hate stocks. Not because they're bad, but because they're too slow for me. What it would take an average stock trader to make in 3 years, I can make in days or weeks trading derivatives and fx. In stocks, a 30% return is great, in futures options or fx, a 100% return is average. But, I have a very high risk tolerance level, so futures, options and fx are better suited for my goals and temperment.

Now to answer your question. As a beginner, I wouldn't recommend either. I would start with equities. Trading is trading, it's just that each asset class has it's own nuances that you must learn. Learn how stocks work, etc. Then from there study up on options, futures and fx to see if they are a fit for you. If they aren't then don't trade them.

Futures are definitely a no-no for beginners. The risk levels are way to high.

Now, it may sound like I'm being a hypocrite by saying that anywhere and howard are being shortsighted, but then saying start off in stocks. I'm not. There is nothing wrong with futures, options or fx, but that is not the place I would recommend you start learning. For example, there's nothing wrong with flying a 747, but I would begin training you on them. I would start you off in a Cessna. Once you know how to fly, you can move on to bigger and more complex aircraft.

The same with trading. Futures, options and fx and be very complex and if you have a basic understanding of trading, then those it will be easier for you to understand those instruments.

I started off in equities, but for me they were boring. I then moved up to futures and futures options and then eventually forex.

Also, to trade futures, you need a minimum of $5000, but more realistically you should start with $10,000 or preferably $100,000. Options, you need about $5000. Same with stocks. But with forex, you can start with as little as $100.

Answer 2

Anywhere is right. The investments that you mentioned are stacked against the novice. Over the long haul, you should come out on top with stocks and bonds. I am an active stock trader, but have had nothing but losses with Forex and commodities. I do trade stock options periodically, but I would recommend becoming comfortable with stocks before trading options.

Answer 3

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Answer 4

Certainly not any of the ones you mention. These all have considerable risk. It requires education and experience to trade them effectively. Not to mention considerable capital. If you don't have a lot of money, you may not meet margin requirements.

Start with bonds or equities.