I Spent 6 Years Finding the Best Market to Trade (FOREX vs FUTURES vs STOCKS vs OPTIONS vs CRYPTO)

Summary

In this video, the speaker shares insights on different trading markets, highlighting the stock market, options trading, and crypto market. They emphasize the reliability of the stock market, especially with well-established companies like Amazon and Tesla. The speaker recommends starting with stocks before moving to the options market, which offers high leverage and potential for large gains, but also significant risk. They caution against the crypto market, citing its volatility and lack of regulation. The speaker offers resources for further learning, including tutorials on tape reading and trade breakdowns.

Takeaways

• 😀 Stock market is preferred by hedge funds and established investors due to its maturity and regulation.
• 😀 Warren Buffet and major investors primarily focus on stocks because of the stability and long-term growth potential.
• 😀 The speaker has been trading for 6 years and has avoided penny stocks, sticking to larger, well-known companies like Amazon, Tesla, and Nvidia.
• 😀 Beginners should start with the stock market first to build their foundation before moving to other markets like options or crypto.
• 😀 Options trading provides higher leverage, enabling potential returns of 1,000% in just a few hours, but also carries high risk, including the risk of losing an entire account.
• 😀 Having a proper strategy and risk management is crucial when trading options, as it can be a double-edged sword.
• 😀 The speaker transitioned to options trading in 2020 after gaining experience in the stock market and understanding risk management.
• 😀 The crypto market is criticized for being volatile and driven by meme coins, making it unsuitable for day trading for a living.
• 😀 Crypto can experience long periods of stagnation, making it difficult to maintain consistent profits or day trade successfully.
• 😀 The stock market is more regulated and mature than the crypto market, which is prone to extreme volatility and high margin risks.
• 😀 The speaker is working on a series of educational videos to guide traders of all levels, including comprehensive guides on tape reading.

Q & A

Why do professional traders and hedge funds mainly trade stocks?

Professional traders and hedge funds, like SMB Capital, primarily trade stocks because the stock market is a mature and regulated market with stable opportunities for growth. Stocks like Amazon, Tesla, and Nvidia provide a solid foundation for long-term trading success compared to more volatile markets.

What is the speaker's opinion on trading penny stocks?

The speaker advises against trading penny stocks, stating that they carry a bad reputation. The speaker prefers to trade large-cap stocks such as Amazon, Tesla, and Nvidia, which offer more reliable opportunities for consistent returns.

How did the speaker transition from the stock market to options trading?

The speaker started trading in the stock market in 2019 to gain foundational knowledge and experience. After understanding risk management and developing a strategy, they transitioned to options trading in 2020. This gradual approach allowed them to handle the increased leverage and risk in the options market.

What are the benefits of options trading over other markets like Forex and Futures?

Options trading provides higher leverage, meaning traders can potentially earn larger returns with a smaller investment. The speaker highlights that options can offer returns of up to 1,000% in a short time frame, which is often not seen in Forex or Futures markets. This leverage allows traders to maximize their profits while risking only a fraction of their capital.

What is the most important factor to succeed in options trading?

The most important factor to succeed in options trading is having a solid strategy and managing risk effectively. Without a strategy, options trading can lead to significant losses. The speaker stresses the importance of knowing what you're doing and understanding the risks involved in order to capitalize on the leverage offered by options.

What is the speaker's view on day trading in the crypto market?

The speaker strongly advises against day trading in the crypto market, claiming it is not suitable for making a living. The crypto market can experience long periods of stagnation, and the high leverage offered (up to 250x) can quickly lead to account blowouts. In comparison to the stock market, the crypto market is seen as more volatile and less predictable.

What are the risks associated with margin trading in crypto?

Margin trading in crypto carries significant risks, as high leverage (up to 250x) can lead to large losses. A small market movement can quickly wipe out a trader's entire account, especially when the market is inactive or stagnant for extended periods. This makes day trading in crypto particularly dangerous.

How does the speaker differentiate between the stock market and the crypto market?

The speaker differentiates the stock market and the crypto market by noting that the stock market is a more mature and regulated environment, whereas the crypto market is more volatile and less regulated. The stock market offers more stability and opportunities for consistent trading, while the crypto market can be unpredictable and prone to large swings.

What kind of videos does the speaker plan to release for their audience?

The speaker plans to release several videos aimed at traders of all levels, including a comprehensive video on tape reading, a comparison between stocks and options, and other educational content. These videos will be part of a beginner series to help traders understand the basics and progress to more advanced topics.

Why does the speaker recommend starting with the stock market for beginner traders?

The speaker recommends starting with the stock market because it provides a stable and regulated environment for beginners to learn and practice trading. By gaining experience in the stock market, new traders can develop a foundation of knowledge and risk management skills before moving on to more complex markets like options or crypto.