Matthew Kerkhoff, options expert and editor of Dow Theory Letters, continues his 14-part educational...
What’s the Perfect Market for You?
08/12/2011 3:30 pm EST
Every trader needs to find a market that suits their own unique personality and trading style. Hubert Senters discusses several markets and the types of traders who should trade each one.
There are more and more things available for you to trade these days, but how do you find something that really suits you and that you can make money at?
My guest today is Hubert Senters; he’s going to talk about finding a market that actually fits your personality and your style. So, Hubert, you hear a lot about finding a market that suits you. What do we mean by that?
Well there are two types of different traders, and a lot of people who start trading, they’ll start in the E-minis, like the S&P mini, because it’s a huge contract; it’s traded, it’s got a lot of volume, but a lot of people lose money trying to trade the E-mini.
It’s a trial-and-error thing, I mean, definitely everyone has to find their own way and their trading style and their trading personality, and it’s kind of hard if you didn’t already go through the experience of learning that the E-minis are choppy.
They’re like sprinters; they’ll run, stop, reverse, and come back after you. So, for stuff that’s choppy or has that sprinting mentality—run, stop, and reverse—that’d be the E-minis like the S&P, the Nasdaq, the Russell, and stuff like that. Those tend to be a little bit choppier, and also, crude oil. Crude tends to be a little choppier.
So, if you’re starting out, those probably wouldn’t be the best places for you to start, although after you get profitable in some other markets, you can come back and revisit those.
I would tend to push people more towards stuff that trends well, that acts like the Energizer bunny, where it just keeps on going and going and going. It’s just a little bit easier to trade, so it makes your job of extracting cash from the market a little bit easier.
So markets like that would be gold, agriculture futures, or currency futures.
Now just to be sure, these move quickly as well and can have times when they are very volatile also, right?
Sure, all the futures markets are very volatile. All I’m saying is you’ve got markets that trend better than others and tend to continue with the move, as opposed to the E-minis, where they’re herky-jerky and kind of jump around a little bit more.
When it comes to personality, does that mean if I’m necessarily ADD tendency or something like that, that I should find a faster market that will keep me from making trades when nothing much is going on?
I don’t know, I think all traders are freaks anyway. I mean, we all have issues just because of what we do for a living!
One thing that you can do is if you’re getting stopped out a lot, or if you find yourself buying breakouts at either the top or the bottom, or chasing and you’re getting stopped out, you’re probably in the wrong market or you’re trying to force your mentality on that market.
So, there is a market that will suit that, and I would try to find that. So, if you’re getting stopped out a lot, where you’re chasing stuff or buying breakouts, the E-minis are not the strategy you want to do for that. Something that would be good for that right now would be gold, some currency futures, or some agriculture products.
Related Articles on STRATEGIES
Profit from a market by capturing a trend. Money management is key. The battle is often from within,...
Has Mr. Market (S&P 500/Equities) priced into too much positivity, while inflation remains at ba...
Berkshire Hathaway (BRK.B) is well known as the huge operating and investment company that was built...