Markets on the rise...
What’s the fuss? Wall Street and CAC and Dax are at record highs.
When any market is trading at new highs, the next target is normally newer highs, which is why momentum trading strategies tend to make the most sense during these times. Take for example, Newton’s law of motion that an object in motion stays in motion. With that in mind, stock markets tend to follow a similar law of motion; they tend to continue to trend until some force causes the motion to slow or reverse.
What approach to take?
If you are a technical trader and believe that markets are trending higher, then it would make sense to continue to trade in the direction of the prevailing trend. On the other hand, if you are a fundamental trader, then perhaps you would be looking down the pipe at what corporate earnings will look like over the next four quarters. Investors with no position in the stock markets should first decide if they will follow a technical or fundamental approach to trading and then follow either the technical or fundamentals.
What to watch out for? Rising inflation is driving up gold and bitcoin.
The recent inflation trade has been one of the greatest in decades. Pre-pandemic, the US FED and the EU Central Bank were already printing money at historic high levels which resulted in huge amounts of cheap money flooding economies, but with the ongoing COVID crisis, central banks have been forced to inject even more liquidity into markets.
Although these central bank actions have had a direct effect on the rising asset prices across the board, what few have yet to realize is that out of this situation has emerged the birth of a whole new class of younger investors who understand and can accept the short term risk of owning digital assets for the opportunity of longer term gains; a trend which was started by central banks and will most likely remain regardless of inflation.
What else is happening? Oil is also generating a lot of expectations this year.
Energy will always be at the forefront of financial markets regardless of whether it comes from fossil fuels or alternatives. The fact is, crude oil remains a very relevant source of energy for the world. With new information released daily, new chances to capitalise on the markets are created.
Every day that there are new trading opportunities in the oil markets, there is a new incentive for traders to capture those opportunities. The accessibility of mobile phones has allowed more people than ever to participate in the price action of energy markets - a revolution in itself. It is important however to keep a close eye on the supply demand factors, price action and OPEC announcements. Oil, like all commodity markets, has a lot of public information available, but at the end of the day it's up to the trader to read between the lines and extract the important information from all the daily market commentary out there.
What about the dollar?
USD is climbing, but will it continue to rise? The direction of the dollar is very important for providing clues to traders and investors, regardless of if you're trading FX, stocks or commodities. The upward price trend for USD (which began at a low in January 2021) does seem to correspond to market expectations that the US Federal Reserve will make a move to increase interest rates at some point in the future.
For traders, the million-dollar question is: how high will the Fed go and when? That answer revolves around inflation. To answer it you should ask yourself: do you think you will be paying more money for energy and your every day-to-day items in 12 or 24 months from now? If you estimate yes, then a further question to pose is this: will these prices continue to rise at a faster or slower pace than what we are already seeing now? If you think so, then you will most likely see the USD getting stronger.
As a broker, Skilling is witnessing the latest trends as they emerge, putting great effort in making sure that our clients have access to the most relevant products as the global economy shifts. Skilling understands that the choice of financial investments these days are staggering which is why it does its best to provide products that can fit into all types of trading strategies. Access to some of the most important and influential CFD products such as FX, crypto or commodities, gives Skilling clients opportunities to capitalise on upcoming market movements. Whether you prefer to trade metals like Gold and Silver, or speculate on energies like Oil and Natural Gas, you’ll always have competitive trading conditions with Skilling.
Skilling provides trading on CFDs across multiple asset classes including the most popular trading symbols. With CFDs you don't have to buy commodities on an exchange as you don't own the underlying asset. Taking a position on the commodity market with CFDs means you can trade on both rising and falling markets (bullish or bearish).
Not only does Skilling offer CFDs on crypto, stocks, FX, Indices and Commodities, but also on a large section of CFDs which are priced from exchange traded funds (ETFs). For example, say you think that you want to trade in emerging economies, such as The WisdomTree India ETF which tracks the performance of some of the largest Indian companies, or the Invesco DB Commodity Index ETF which tracks a medley of commodities. For those who think that the US will increase interest rates, the XLF Financial Select Fund could be interesting to follow. If trading CFDs on stocks, bonds, or commodities is not your thing, then maybe a real estate ETF CFD could be, such as AOXG Alstria Office REIT that tracks the commercial real estate market.
Whatever sector you follow or prefer to trade there is most likely an instrument available at Skilling. As the company grows, Skilling follows the trends, offering the latest products that are moving the markets, giving traders what they want, when they want it.
Not investment advice. Past performance does not guarantee or predict future performance. Your capital is at risk
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