Build a profitable business – evaluating the strengths of the stock, commodity and FOREX markets.
In this article, I will introduce you to the strengths of various global financial markets, which will allow you to plan your trade for many years and build a successful business. As for me, a business can be considered successful in the case when you get a significant profit with a minimum expenditure of time and effort.
Trading in the financial markets today is one of the most profitable business models in which you just need to figure it out. For trading in financial markets, you need to understand one thing – this is how the price of a particular financial instrument will change in the future, which will allow you to earn.
Stock market strengths
Considering trading in the stock market, we will talk about trading CFD contracts on stocks of various companies. What is a significant plus when trading stocks – the number of factors that may affect the price:
- Sphere of the company’s activity;
- The demand for goods or services that it provides;
- The position of competitors.
As you can see, there are only three main factors, which allows us to assess quickly what will happen next with the price of shares. Making an effective assessment of the development prospects of the company, based on its scope, demand for products and competition, you can trade safely in its shares. At the same time, making deals both for a short and for a long period, without fear of losing your money, which allows you to make only a few deals a month, or even a year, and get a significant profit.
Commodity market
The commodity market is attractive because the main factor in trading that is taken into account is the balance of supply and demand. Only with a correct assessment of demand for a particular product in the future, it is possible to estimate how much the prices of a commodity or raw material will change in future.
What influences the balance of supply and demand?
Naturally for different groups of goods factors will also be different. If we consider oil as an example, it’s easy. Oil quotes are mostly under pressure due to an oversupply of raw materials on the market, at the same time, any signals of a decrease in production, a decrease in supply or an increase in demand among large global consumers will support oil prices.
Also it is necessary to take into account the seasonality factor, since, for example, in winter the need for energy resources is higher than in summer, which increases the demand. Also, with regard to the seasonality factor, it should be borne in mind that in different parts of the world, winter comes in different ways. Seasonality affects not only energy demand, but also food products and even building materials.
As you can see, the assessment of the price movement in the commodity market is also quite simple, which makes this market very attractive for trading on it, but it is not worthwhile to enter into transactions in this market for a long time, because force majeure strongly influences it. As, for example, the oil market is often influenced by the aggravation of the unstable situation in Nigeria or Libya.
Currency market
Assessment the price movement of an instrument in the foreign exchange market is a bit more complicated than it is in the stock or commodity market, because to evaluate the movement of just one instrument, you need to make an economic assessment of at least two countries, not to mention the other factors of influence. But do not make premature conclusions, because the main advantage of the FOREX market is its high liquidity and lower margin level in trading, which allows not only to make profitable deals, but also to hedge them perfectly.
| Instrument | Margin with a volume of 1 lot | Cost of 1 point with a volume of 1 lot |
|---|---|---|
| CFD for share | Share’s Price * 10 | $ 1 |
| CFD for oil | $ 1500,00 | $ 10 |
| Currency instruments | $ 1000 – 1500 | $ 10-15 |
For example, if you consider buying Google’s shares in the amount of 1 lot, the value of which currently varies within $ 950.00, you need to provide a security bond of $ 9,500.00, while the price change per day can be within 700-1000 points, which will earn from $ 700 to $ 1000. At the same time, this margin is enough to enter into a transaction with a volume of 9 lots in the foreign exchange market, while for a profit of $ 900 the price should change by only 9 points, taking into account the spread.
It is worth noting that if you want to become a successful trader in the global financial markets and in the future to trade on the stock and commodity markets, it is worthwhile to start trading in the FOREX market, as in this market there are more chances to develop your deposit due to higher liquidity and lower levels margins.
Any trader who learns to process the data flow needed to assess the change in the price of an instrument in the foreign exchange market quickly can easily assess the situation in the stock and commodity markets and build their business competently.
If you want to trade on shares of the largest and most stable companies in the world start to trade in the FOREX market with Еster Holdings Inc. and develop your deposit.
Alexander Sivtsov