The financial markets arguably represent one of the most active industries in the world, with trillions of dollars traded daily. The foreign exchange (Forex) market hit a $6.6 trillion daily trading volume last September, while the equities market transacts roughly $84 billion within the same period.
What about the crypto market?
The fast-growing space at the time of writing this report, the top ten crypto exchanges and futures trading platforms recorded a daily bitcoin trading volume of roughly $1 billion. The altcoin market which consists of other cryptocurrencies that are not Bitcoin recorded appr. $20 billion within the same period.
It is clear to see that the financial market presents a significant opportunity both for investors who are looking to gain in the short or long-term. To achieve the best results, however, a lot of factors come to play.
We’ll spend the rest of this article to discuss these factors ad how anyone can easily navigate and profit from the burgeoning financial market.
1. Understanding the Market
Before you begin trading stocks, forex, options, or cryptocurrencies, gaining a clear understanding of how these markets work can determine whether you’ll end up successful or otherwise.
For instance, while the global economic situation generally influences these markets, some are more adversely affected than others when there’s a negative development. Bitcoin, the dominant cryptocurrency, is reportedly becoming an option for individuals to safeguard their wealth in the case of global crisis, as shown by the recent Iran/America tussle.
With these factors in mind, anyone looking to investing in any financial market needs to spend some time and money in acquiring and studying educational resources such as videos, e-books, and live training.
Additionally, trading with a demo account offered by the brokerage company you wish to trade or invest via their platform provides an excellent opportunity for you to ride the market without putting your funds at stake.
Once you understand the basics of how each market works, it is now time to pay attention to what moves the trend and how you can stay on top of your game.
2. Following News and Trends
Among the things you’ll learn about the financial market is that price fluctuations can be significantly influenced by news and trends either around the globe or the asset class you’re trading.
It is for this reason that the best traders recommend keeping up to date with news and happenings all the time. It can be a big task to do so, especially if your brokerage service doesn’t provide a feed for updates.
However, keep track of news can make a massive difference between a profitable and losing trade. A good example is a fact that the Bitcoin futures expiration date on the CME Group Exchange usually impacts the value of the cryptocurrency for a specified period.
Also, news of a major crypto exchange hack or the approval of specific regulatory applications by crypto projects can boost investor confidence and turn a bearish market to bullish within the space of a few minutes.
Therefore, monitoring news around the asset you’re investing in is crucial, as a failure to do so could have drastic effects on your profit/loss margin.
3. Defining Your Investing or Trading Strategy
Just before you put your funds in the market or setup that trade, defining values such as your entry and exit strategy is vital. This is vital since both short and long-term profit opportunities exist in every financial market.
You could buy stocks, currencies, or cryptocurrencies with the objective of selling them for a reasonable profit once the price goes up. This approach is called holding and works best for individuals seeking long-term yields and usually do not have time to monitor price action for the asset they bought.
There are, however, day traders who ride the market daily with the target of making profits between short-term price fluctuations. Although this strategy is inherently risky, the profit margins over time could outperform what is achieved by long-term investors.
Meanwhile, there is also the chance of lending your funds, either cash, or crypto to other traders in exchange for regular interests paid in cash, or the cryptocurrency which you loaned to the exchange platform.
Either way, defining and sticking your desired profit and loss range ensures that wild market actions won’t sway you. Evidence has shown that abiding by a common trading strategy: buy an asset when most investors are selling, and the sell when others are buying, has yielded tangible profits even for beginners.
4. Choosing the Right Brokerage Firm
The brokerage firm that you use for trading stocks, forex, options, or crypto can also play a huge role in how successful your trades and overall experience will turn out. No, we’re not saying that the exchange platform will place your trades, even though they can do so if you give them the approval to do so.
However, we’re suggesting that necessary features such as fund security, data encryption, low commissions, and multiple account types are some of the benefits of using a trusted brokerage service like BrightFinance.
Using the platform allows traders to focus on navigating the already risky nature of the financial markets, and then focus on weightier matters such as timing their trade exit and entry strategies to perfection.
A review also shows that BrightFinance offers a personal bookkeeper and regular customer support to attend to inquiries that you have about the platform or any of the trading tools that they offer.
It is absolutely possible to generate high yields from the financial markets, but only after you put the factors that we’ve considered in this article into consideration. Spend time to understand the market, invest in tools for tracking news updates, define your trading strategies, and then use the right brokerage service.
Note that although implementing these strategies does not guarantee success at all times. (because of the inherent risks involved in the financial markets) you will record more wins than losses.