Yes, there are several types of day trading beyond forex, such as stock trading, commodity speculation, index speculation, and cryptocurrencies trading. A lot of different derivatives can be utilized for day trading, including options, futures, and contracts for difference (CFDs), and they can be based on almost anything where there is a prize fluctuation.
Day trading involves opening and closing positions within the same day, and traders can choose from a variety of markets, each with its own unique characteristics, risks, and potential rewards.
In this article, we will take a look at some popular alternatives to forex day trading. Each type of day trading market has its unique characteristics, and the right choice for you depends on factors such as your goals, risk tolerance, knowledge, and trading style. Stock day trading or ETF trading is generally easier to start with and more regulated, providing safer options for beginners. ETF is short for Exchange-Traded Fund, which means a fund where the fund shares are traded on an official stock exchange. Trading ETF shares is therefore quite similar to trading stocks.
If you are okay with high risk, forex day trading and cryptocurrency day trading are both appealing, and some forex traders that wish to branch out do go into cryptocurrency trading or speculation.
These markets are known to be highly volatile, which creates opportunities for both big profits and big losses in the blink of an eye. Just like forex, cryptocurrency trading is good if you want to trade outside regular market hours, as forex and cryptocurrency offer a lot of flexibility, while e.g. stock and index trading is limited to traditional hours. The forex market is open 24/5 (Monday – Friday) while cryptocurrency trading takes place 24/7.
Many forex brokers offer a lot of leverage, which is appealing to some traders. It is good to know, however, that leverage is available for other types of trading as well. You do not have to stick to forex trading to get access to leverage.
Popular alternatives to forex day trading
Stock Day Trading
Stock day trading involves buying and selling shares of individual companies within a single trading day. Stock markets have high liquidity, particularly for major companies, making it possible to execute trades quickly.
- Volatility: Stocks can experience sharp price movements in response to news, earnings reports, or market sentiment, creating opportunities for profit.
- Market Hours: Stock day trading is usually limited to regular market hours, which for the U.S. market is from 9:30 AM to 4 PM ET.
- Wide Range of Choices: Traders can focus on well-known, high-volume stocks or smaller, more volatile stocks, depending on their strategy and risk tolerance.
Many stock day traders use technical analysis, trend patterns, and price indicators to inform their trades. Stock day trading requires substantial capital and tends to be more heavily regulated than other forms of day trading.
Stock Options Day Trading
Stock options day trading involves buying and selling stock options contracts, which are financial derivatives that give traders the right, but not the obligation, to buy or sell a quantity of the underlying asset (a stock) at a specific price until or on a certain date.
- Leverage and Flexibility: Options provide leverage, allowing traders to control a large amount of stock for a fraction of the cost. This leverage amplifies both potential gains and losses.
- Volatility Opportunities: Options can be particularly profitable during times of high volatility, as the price of options tends to increase with greater market fluctuations.
- Multiple Strategies: Options trading offers strategies beyond simple buying and selling, like calls and puts, spreads, and straddles, allowing traders to profit in both rising and falling markets.
Options day trading requires a solid understanding of options pricing, time decay, and risk management, as well as an appetite for potentially high-risk trades. Beginners should approach this with caution, as options can be complex and highly sensitive to market moves.
Cryptocurrency Day Trading
Cryptocurrency day trading has gained popularity as the crypto market has become more accessible. It involves buying and selling digital assets like Bitcoin, Ether (Ethereum) and other cryptocoins within short time frames. Some pairs are cryptocurrency – cryptocurrency (e.g. BTC/ETH), while others are cryptocurrency – fiat currency (e.g. BTC/USD).
- 24/7 Market: Unlike other financial markets, cryptocurrency trading is available 24/7, allowing traders to trade at any time, though this can also lead to burnout.
- High Volatility: Cryptocurrencies are known for their extreme volatility, providing opportunities for significant gains—and losses—within short time frames.
- Low Barrier to Entry: Many crypto trading platforms have low minimums for opening accounts, making it accessible for beginners.
Crypto day trading is highly speculative and risky. Additionally, crypto markets lack the regulation of other financial markets, making it easier for new traders to fall victim to scams or exchange failures.
Note: You can gain exposure to cryptocurrency exchange rates without actually buying and selling cryptocurrency. There are many traditional and well-regulated brokers that offer cryptocoin speculation through derivatives, e.g. CFDs based on exchange rates. This way, you do not have to involve yourself with poorly regulated crypto trading platforms.
Examples of large and well-known cryptocurrencies:
- Bitcoin (BTC). The oldest blockchain cryptocurrency and also the one with the largest market capitalization. Launched in 2009.
- Ether (ETH). Ether is the native coin (token) for the network Ethereum. The network was designed as an alternative to traditional financial service firms. ETH is required to run transactions on the Ethereum network.
- XRP. XRP is the native coin (token) of the Ripple network. Launched in 2012, this network uses the Ripple protocol to prioritize speed and keep costs down. Ripple is a real-time gross settlement system, currency exchange, and remittance network open to financial institutions worldwide.
- ADA. ADA is the native coin (token) for the Cardano network. Launched in 2017, Cardano quickly became the largest network to use a proof-of-stake blockchain instead of proof-of-work. The development of Cardano was led by the Ethereum co-founder Charles Hoskinson.
Futures Day Trading
Futures trading involves buying and selling futures contracts, which are agreements to buy or sell a specific asset (like commodities, indices, or currencies) at a predetermined price in the future. Futures traders typically aim to profit from price fluctuations before the contract expires. A futures contract is a type of derivative. Futures contracts are available for many different assets, e.g. energy commodities and precious metals.
- Leverage: Futures trading typically involves high leverage, which can magnify profits but also significantly increase risk.
- Market Hours: Many futures markets, like the U.S. futures market, are open nearly 24 hours a day during the week, giving traders flexibility in their schedules.
- Diverse Market Options: Futures markets cover a wide range of assets beyond stocks, including commodities like oil and gold, as well as stock indices like the S&P 500.
Futures day trading is best suited for experienced traders due to the complexity and high leverage involved. It requires a deep understanding of the specific asset being traded, as different markets respond to unique economic and geopolitical events.
CFD (Contract for Difference) Day Trading
A CFD is a financial contract that allows traders to speculate on price movements without owning the underlying asset. CFD day trading is popular in regions where these contracts are legal. With CFD trading, your broker is also your counterpart, which creates a certain conflict of interest.
- Range of Assets: CFDs allow you to trade on the price movements of stocks, forex, commodities, indices, and more, making them highly versatile.
- Low Cost: Using CFDs for speculation generally come with lower costs compared to trading actual assets.
- Leverage: CFDs typically offer leverage, which will amplify both gains and losses.
- Profit in Both Directions: Since CFDs allow you to go long or short, it is easy to profit even from falling markets, without having to involve yourself in classic short-selling (with an unlimited downside).
CFD trading is often highly leveraged, which means high risk, and traders should ensure they understand the risks associated with leverage and the specific markets they’re trading.
Index Day Trading
Index trading involves speculating on the movements of an index. A lot of the index day trading is based on major stock indices, like the S&P 500, NASDAQ, or FTSE 100. You can speculate on indices through a variety of derivatives, including CFDs. Some ETFs are designed to follow the movements of a specific index.
- Less Volatility Than Individual Stocks: Indices tend to be less volatile than individual stocks, as they represent a group of companies rather than a single one.
- Macro-Level Analysis: Index trading allows you to focus on broader economic trends rather than the specific fundamentals of individual companies.
- Extended Market Hours: Many index futures trade nearly 24 hours, allowing more trading opportunities and the flexibility to respond to global market news.
Index day trading can be easier to analyze compared to individual stocks, as it’s based on overall market sentiment rather than individual company performance. However, there’s still risk, particularly during periods of high volatility.
Examples of different types of coverage for stock indices:
- Global coverage. This type of index attempts to represent the performance of the global stock markets. There is for instance the FTSE Global Equity Index Series, which includes over 16,000 companies.
- Regional coverage. This type of index attempts to represent the performance of the stock markets within a specific region, e.g. the European Union or the Asia Pacific region.
- Country coverage. This type of index attempts to represent the performance of the stock markets within a specific country, e.g. the United States or Japan. Typically, the index will be composed of the largest companies listed on the nations one or two largest stock exchanges. Example: The DAX (Deutscher Aktienindex) consists of the 40 major German blue chip companies listed on the Frankfurt Stock Exchange.
- Exchange coverage: This type of index attempts to represent the performance of a specific stock market or group of exchanges. Examples: NASDAQ-100, FTSE 100, OMX Nordic 40, and Euronext 100.
- Sector coverage: This type of index attempts to represent the performance of a specific market sector or industry. Examples: The NASDAQ Biotechnology Index is based on NASDAQ-listed companies classified as belonging to either the biotechnology industry or the pharmaceutical industry. The US REIT Index tracks 80+ real estate investment trusts. The Nasdaq Financial-100 (^IXF) tracks NASDAQ-listed companies in the financial services industry, including banking, insurance, mortgages, and securities trading.
Commodities Day Trading
Commodities day trading involves buying and selling commodities like gold, oil, natural gas, and agricultural products within the same day. You can speculate on commodity prices through a variety of derivatives, including futures contracts, options, and CFDs. Some ETFs are designed to follow the market price of a specific commodity, e.g. gold.
- Response to Economic Events: Commodities often respond quickly to economic reports, geopolitical events, and natural disasters, creating price movement opportunities.
- 24-Hour Market: Many commodities markets are open nearly 24 hours, especially when trading via futures or CFDs.
- High Leverage Potential: Like forex and futures, commodities trading often involves leverage, which can amplify profits but also increases risk.
Commodities day trading requires a good understanding of global events and supply-demand dynamics, as these factors significantly affect commodity prices.
Examples of common commodities for day trading:
- Energies, such as Brent oil (a type of crude oil), WTI oil (another type of cruid oil), and natural gas.
- Agricultural commodities, such as cocoa, coffee, sugar, and wheat.
- Precious metals, such as gold, silver, and platinum.
- Other metals, such as copper, zink, and aluminium.