Top 5 ways to trade more efficiently

The ‘new normal’ that is fast taking shape around the world is characterized by a myriad of opportunities to be embraced and threats to be avoided.

The sages say that there is nothing new under the sun, and that age-old-aphorism certainly holds true in this day and age. While the economic reality we now face appears to be uncharted territory, the powers that be have merely clicked the reset button on the global economy, with a set of new rules in place.

The focus has long been shifting away from traditional bricks and mortar bastions of trading and investment activity towards the online arena where the added comfort and convenience of anytime, anywhere trading is bolstered with the many safety and security features that are in effect. The same broad categories of financial instruments are available to traders and investors, notably: commodities, currencies, indices, and stocks, with the usual mix of contrarian tradable options in cryptocurrency, spread betting options, CFDs, and the like.

Additional options continue to be added into the mix, helping to bolster the variety available to traders. With so much frenetic activity characterizing the financial markets in 2020, it’s hard to make sense of the bulls and the bears, or which pathway will yield the best results. In this guide, 5 ways to trade more efficiently are presented and if implemented correctly, traders will enjoy enhanced success with their chosen trading account. To be successful with these trading accounts, the following 5 tips need to be implemented:

Focus attention on financial instruments with strong rebound potential

It comes as no surprise that the global economy has been devastated by geopolitical considerations in 2020. Many industries have taken a huge hit, not least of which are base metals, cruise lines, oil & gas services. However, the unprecedented downturn in stock prices for these industries presents opportunities to buy on the dip.

Barring the complete disappearance of cruise lines, base metals, or oil & gas, a rebound is definitely on the cards. The global economy cannot function without a balanced supply of oil & gas, and while prices will whipsaw wildly as Saudi Arabia and Russia, OPEC and non-OPEC nations try to address the discrepancies between supply and demand, and global economic malaise, a return to stability will invariably take place.

While oil prices are approaching historic lows, traders and investors are well aware of the potential this industry has when economic activity resumes. The cruise ship industry should be perceived as a long-term slow recovery option, with no short-term boost expectations in the pipeline. Nonetheless, there are now viable opportunities to invest in industry-leading cruise liners while prices are low, for a long-term yield.

Switch to reputable online trading enterprises

Traders have been moving towards online trading in increasing numbers over the years. That trend has accelerated dramatically in recent months, and will likely continue moving forward. Online trading at reputable brokers offers all the comfort, convenience, and cost effectiveness that is needed to maximize gains, while keeping costs, fees, commissions, and hidden charges to a minimum. The online trading arena is now characterized by many different types of trading accounts, each designed for specific profiles of traders. Risk averse, or risk seeking, high budget, low budget, aggressive growth, or low growth, et al.

A renewed focus on safe-haven assets

Many of us are hoping for a dramatic and unprecedented rebound when the global economy reopens. We now know that the recovery will likely be a gradual one, with incremental improvements to the economy. In the absence of a panacea and unprecedented global immunizations/vaccinations, there is no other way to fast-track the recovery process. Rather, focus should be placed on diversifying financial portfolios to represent a more stable mix of financial instruments.

This means that more safe-haven assets need to be included in the mix, such as gold bullion, gold stocks, gold ETFs, safe-haven currencies like the Japanese yen, and the USD, and possibly even Bitcoin. By switching from high-risk stocks like tech stocks, biotech stocks, energy stocks, travel and recreation stocks, restaurants, pharmaceuticals, and new startups to tried and trusted companies, it is possible to decelerate losses and shore up investment portfolios. Notable performers include SPDR Gold Trust, an ETF with the largest stockpile of gold holdings in the world.

Unprecedented investments in local enterprise

Newton’s Third Law states: For every action, there is an equal and opposite reaction. If we have learned anything from current global turmoil, it is this: individual countries are now going to focus on maintaining control over essential factors of production, manufacturing capacity, and resources. The global pandemic disproportionately affected Western countries in terms of their ability to provide the necessary personal protective equipment, medical supplies, cleaning essentials, et al needed to safely contain and manage the pandemic. Widespread production has taken place in the US and individual countries all over the world, facilitating local industrial growth, manufacturing, and production over heavy reliance on imports from abroad. This presents traders and investors with many new opportunities for growth.

Risk management will become even more important

During times of high volatility, traders will need to implement protective stop loss orders. This is equally important during regular trading sessions. Nowadays, with the VIX having whipsawed wildly to reflect the economic uncertainty we are all facing, it is more important than ever to mitigate risks as much as possible. To this effect, trading positions require significantly more breathing room, to allow prices to move up and down, while simultaneously keeping positions secure. The use of trailing stops and take profit targets will become more important moving forward.