Are you getting ready to enter the securities marketplace in late 2022? If so, don’t dive in without gathering the basic facts about how equities, cryptocurrency, CFDs (contracts for difference), and other asset classes have been performing in recent months. Once you get involved in your favorite area, don’t forget to check in with market-related news at least two times per week to be informed of the general sentiment.
What’s the latest on the global equity indices? It’s important for new traders to know that after a four-year slow rise of most equities markets from 2016 through 2020, the COVID pandemic cut the linear rise short. But, within a few months, things were back on track, and the DAX index in Germany, along with Japan’s Nikkei, and the US S&P 500 turned back into positive growth territory. Then, in January of 2022, the whole scene went sour once again.†
This time, however, it was not a short-term downswing. Instead, international equities indices headed south for about eight straight months, pausing briefly for a brief pullback (an upward correction) in August. By late September, the situation was back in red, with huge losses across the board. Newcomers to trading should be aware that bear markets can present unique opportunities to pick up shares at bargain prices.
In the digital age, anyone can get involved in online trading just by opening an account and choosing an asset they enjoy buying and selling. In forex (FX), or foreign currency, the price of entry is low, most brokerage firms allow for plenty of leverage, and it’s a simple enough thing to learn the basics by using a demo account for practice. One of the best aspects of trading FX is that traders can go long or short, depending on what direction they predict prices are headed.†
With every currency pair, one side is always a winner, so the goal is to make accurate predictions. No matter your level of experience, FX brokers like AvaTrade make setting up an online account easy. Plus, there are plenty of educational materials to ramp up your skills quickly.
The cryptos have had a tough year, and many devotees of virtual currency are wondering if all the shoes have dropped. Segment leaders bitcoin (BTC) and ethereum (ETH) have lost about half their total value since January and have continued to perform poorly amid corporate share devaluations. However, optimists note that every prior drop in the altcoin index has been followed by history-making upturns.†
Will that happen again, and if so, when? Long-term speculation is one thing. What about the fate of the cryptocurrencies up to Q1 of 2023? Will BTC reach the $25k mark before the year is out? A lot could depend on government regulation of the asset, particularly in Europe and the US. Another factor is the potential for the US conversion to a digital dollar. It would be a chief competitor to the cryptos and could further suppress prices all around.
CFDs (Contracts for Difference)
CFDs are designed for investors who want to do two things: spend less money for a stake in any asset class and to play the market without owning an underlying asset. Contracts for difference are one of the safer instruments for new trading enthusiasts in 2022 because they offer a very low cost of entry. With overall equity values reaching a third-leg low in late September, CFD accounts are looking better and better. One reason so many first-time investors prefer CFD-based activity is the ease of taking short and long positions. With global indices down and apparently going lower, a contract for difference can be the smartest way to profit from more grim news from equities.
The options universe includes contracts on equities, forex pairs, and many other asset classes, including exchange indices. In many ways, the entire segment is immune from the bear market effect because investors use option contracts to speculate in both price directions. That’s why so many traders and retail investing enthusiasts include these instruments in their portfolios. But is the current scenario a good one for those who prefer this type of speculation?†
In a way, options are an ideal way to play any kind of market, but they tend to be much riskier in volatile times. With the international economy in its state of uncertainty, newcomers to the markets should be very careful with all derivatives, particularly option contracts. It’s imperative to set careful stop-loss points to avoid losing more than the original investment amount. Likewise, be sure to take an online course on how to trade options before getting into live action.
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