In recent years, positive trends in consumer credit activities have helped create major shifts in the tendency to place retail investment trades online, rather than on the floor of a traditional stock exchange. There is a wide variety of ways to start doing this. Already, there is a large and growing number of regulated brokers that offer access to all of the major asset classes with trading platforms that can be managed through PCs and mobile devices.
Positioning for Market-Moving Events
The nuts and bolts of online trading are relatively easy to grasp. Trades can be placed with quick efficiency, then stop losses and profit targets can be executed as a means for conservatively managing your market positions. But there are deeper factors that must be understood before any real money is put on the line. For example, markets tend to become more volatile and unpredictable when a major data or news event has been released and traders are forced to re-position. But there are also ways of approaching the market so that you are less likely to be caught off-guard when market start to move more quickly. Given the fast-paced (and often automated) nature of financial markets
One of the best ways to position yourself for market-moving events is to monitor an upcoming forex economic calendar. This will give you an idea of when a macro data release or important central bank meeting is scheduled. In daytrading, it is generally it is a good idea to have smaller exposure during these circumstances because there is less predictability in the market. For those with longer term strategies, position sizing is less impacted by the day-to-day fluctuations in market valuations. But, in most cases, it is best to adopt options strategies as a means for protecting yourself against abrupt changes in the market.
Focusing on Sector Activities
Last, it is generally a good idea to have a firm understanding of how each asset sector relates to one another. Most people tend to have some understanding of the way the stock market works, but pay less attention to how things like forex market and precious metals can influence the broader financial environment. For precious metals, this means that a stock investor might want to monitor the activity in the SPDR Gold Trust ETF (NYSE:GLD) or the iShares Silver Trust ETF (NYSE:SLV). In forex markets, it is a good idea be aware of the developments in the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP).
For stock traders, more options are in place. You can always trade an ETF that tracks the activity of a global benchmark, like the SPDR S&P 500 Trust ETF (NYSE:SPY). Alternatively, online stock traders will also have the opportunity to trade in individual company names like Apple, Inc. (NASDAQ: AAPL) and Google, Inc. (NASDAQ: GOOG). But all of these asset types influence one another, and we can see one example in the gold chart shown below.
For example, consider the impact of a rising gold price. This trend was accompanied by a downtrend in the US Dollar, as investors sold Dollars for gold in anticipation of rising inflation. For these reasons, it is generally a good idea to have a sense of where gold prices are so that you can make a suitable gold forecast for the period ahead.