The markets we trade

Module 4 asked you to pick a single market. Here is how to choose it, among three families; shares and cryptocurrencies stay aside (step 14).

Three families

• Stock indices measure a basket of shares: the Nasdaq-100 (the hundred largest non-financial companies on the Nasdaq), the S&P 500 (five hundred large US companies), the DAX (forty German companies).
• Gold, quoted in dollars per ounce, reacts to the dollar, to interest rates and to periods of worry.
• Currency pairs give the price of one currency in another: euro-dollar, how many dollars one euro is worth. It is the most traded market in the world, with no central exchange.

The market and its vehicle

An index is only a calculation: you trade a product that follows its price. Same price, different rules depending on the vehicle:

• the Nasdaq-100: a futures contract (NQ, or the micro MNQ) or a CFD, under a name that varies by broker (US100, NAS100…);
• gold: a futures contract (GC, MGC) or a CFD (XAUUSD);
• euro-dollar: spot or a CFD with a broker, or a futures contract (6E).

The same reading everywhere

A candle, a trend, a level read the same way on all three: the site’s examples taken on the Nasdaq apply as they are to a pair.

What changes: the units (points or pips), the active hours and the sizing arithmetic, which the next steps cover.

A futures contract is a standardised commitment, listed on an exchange, to buy or sell an underlying at a set date. For US indices and gold, that exchange is CME Group, in Chicago.

The same contract everywhere

The exchange sets what one contract represents, its smallest price step (the tick) and what one point is worth, identical at every broker. The price is unique too: one order book for everyone.

Each contract has a micro version worth one tenth of it: same chart, same hours, ten times less risk per point.

Expiry and rollover

Only the movement of the price interests you: you close well before expiry. But it matters:

• index contracts expire in March, June, September and December (H, M, U, Z): NQZ6 is the December 2026 NQ;
• about a week before, volume moves to the next contract, at a slightly different price: that is the rollover;
• NQ1! on TradingView chains the contracts, sometimes with a jump at the switch;
• gold has its own calendar: the platform shows the active contract.

Margin and costs

The exchange sets the overnight margin, your broker the day margin, often lower. It says how many contracts you can open, not how much you are risking (module 1).

On costs: a commission per contract and the gap between buyers and sellers; no overnight swap.

EUR/USD at 1.0850: one euro is worth 1.0850 dollars. Buying the pair means buying the euro (the base) against the dollar (the quote currency): you win if it rises.

No central exchange

The majors, the most traded pairs, all have the dollar on one side: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD, NZD/USD.

They trade over the counter, between banks and large intermediaries, and each broker shows its own price: a high can overshoot by a few tenths of a pip at one broker only. Your stop follows your own broker’s price.

Lots, pips and costs

• A standard lot is 100,000 units of the base currency; the usual step is 0.01 lot.
• A pip is worth 10 dollars per lot on a pair quoted in dollars, whatever the rate; on the others (USD/JPY…), the platform displays it.
• The spread, the main cost, is narrow while London and New York are open, wider at night, around 17:00 New York time (the forex day change). Overnight, a position pays or receives the swap.

The CFD

The CFD, contract for difference, replicates the price of an underlying without you owning it: indices, gold, and in many countries forex.

Its rules are the broker’s: hours, spread, swap, leverage, lot size (1, 10 or 100 ounces of gold depending on the house). Read its specification before calculating anything.

No best market: only the one that suits your capital, your hours and the way you want to be funded.

Your capital

With the 1% rule, a 2,000-dollar account risks 20 dollars:

• on MNQ, a 25-point stop already costs 50 dollars per contract: market closed with that stop;
• on EUR/USD, the same account can open 0.13 lot with a 15-pip stop.

Forex slices finely, futures in fixed steps: a constraint, not a flaw.

Your hours, your price

Euro-dollar comes alive from the London open, US indices mostly around the New York open: choose a market that is active in your free hours.

A futures contract has the same price and specifications everywhere; a CFD or a spot pair follows the broker’s rules. Your country also limits what you can open.

Broker or prop firm

A prop firm sells an evaluation: a simulated account under its rules (a maximum loss, often a threshold that follows your gains, sometimes a consistency rule).

Pass it, and it shares with you the gains of a so-called funded account, often simulated as well: sizes a small capital cannot reach, in exchange for an evaluation fee lost if you fail.

They exist for futures as well as for forex. With a broker there is no outside rule: your capital, and your losses.

Module 3 set the order: stop first, size second. Everywhere, size = risk in money ÷ (stop distance × value of one point per contract, or one pip per lot).

One account, three markets

A 10,000-dollar account, 1% risk, so 100 dollars:

• MNQ, 25-point stop: 50 dollars per contract, so 2 contracts;
• EUR/USD, 15-pip stop: 150 dollars per lot, so 0.666… lot, rounded to 0.66 (99 dollars of actual risk);
• MGC, gold as a micro, 8-point stop: 80 dollars, so 1 contract.

On NQ, the same stop risks 500 dollars per contract: 0.2 contract, which cannot be split. Do not round up to 1: switch to the micro, or let the trade go.

Two rules everywhere

• Round down, never to the nearest: rounding up would have you risk more than planned.
• If the calculation gives zero, it is zero: the stop is too far for that contract, or the capital too small for that market.

Raising the risk to “have at least one position” is the mistake to avoid.

Three special cases

• Account not in dollars: convert the risk first.
• Pair not quoted in dollars (USD/JPY, EUR/GBP): the pip value your platform shows.
• CFD: the lot size at your broker.

The site’s position size calculator handles these cases (with your broker’s value for the last two) and always rounds down.

Forex opens on Sunday at 17:00 New York time and closes on Friday at the same hour. CME futures on indices and gold do almost the same, with a one-hour break every day from 17:00.

Three sessions

• Asia (Tokyo, Sydney) opens the day: quiet on euro-dollar and US indices, busier on the yen and the Australian dollar;
• London, the largest forex centre, opens at 3:00 New York time (8:00 in London);
• New York opens at 8:00 (13:00 in London), the US stock market at 9:30 (14:30), when the indices often come alive.

The overlap

London and New York are open together from 8:00 to 11:30 New York time, from 13:00 to 16:30 in London. The major US statistics come out then, and these are the most volatile hours, for euro-dollar as for the Nasdaq.

Two clock traps

• The United States and Europe do not change their clocks on the same weekend: for a few weeks a year, in March and again from late October to early November, London is only four hours ahead instead of five.
• Holidays, US ones above all, empty the market or shorten the session: check your broker’s calendar.

Three US statistics, published at a fixed time, shake indices, gold and the pairs against the dollar: euro-dollar as much as the Nasdaq.

Three dates to know

• CPI, US inflation: once a month, at 8:30 New York time (13:30 in London).
• NFP, jobs: same hour, usually on a Friday early in the month.
• The FOMC, the Fed committee that sets rates: eight times a year, at 14:00 New York time (19:00 in London). The 14:30 press conference often moves price a second time.

A sequence, not a direction

• In the seconds before, orders are pulled and the spread widens.
• On publication, price can cover in one minute the distance of an ordinary hour, often one way and then the other.
• Stops are filled wherever orders are left, not necessarily at the planned level: module 3’s slippage, at its worst.

The course’s rule

No open position at the release, and no new entry before the first candles. A trade taken before is a bet on a number, not a reading of the chart.

Some prop firms also forbid trading around these releases.

The ECB matters too for the euro, the Bank of England for the pound: check an economic calendar every morning. The site’s time tools list the next US dates.

Two tools to keep apart, even in a single window: the chart, where you analyse, and execution, where your orders go.

Platform and symbol

Execution goes through the broker’s or the prop firm’s platform: often MetaTrader for forex and CFDs, Tradovate or NinjaTrader for futures.

Draw your levels on the symbol you trade: NQ1! chains the contracts, a Nasdaq CFD does not have the exact price of the futures contract, and one data provider’s EUR/USD differs slightly from the broker’s.

The order ticket

The ticket carries the instrument, the direction, the size, the order type, then the stop and target attached as it is sent: the grouped order (bracket or OCO), where one is cancelled when the other is hit.

Re-read the size: 0.66 lot is not 66 lots, and 2 NQ are not 2 MNQ.

Demo and replay

Demo (module 4) teaches those mechanics without risk, but not everything:

• limit orders fill there as soon as price touches the level, which live it sometimes has to trade through;
• slippage is small, and fear absent.

Keep the platform and the settings you will have live.

Replay plays a past session on TradingView candle by candle, without showing what follows: you decide, the market answers, in twenty minutes instead of seven hours.

The Arena battle does the same on real Nasdaq and gold sessions, with a score and a debrief.