“In investing, what is comfortable is rarely profitable.” – Robert Arnott
Are you a financial market trader, or are you looking at entering the market? It is fairly obvious by now that the current global socio-economic and geopolitical instability is here to stay, for the foreseeable future at any rate. Consequently, to navigate the complexities of the volatile global financial environment, it is critical that you take note of several important points before you start trading on any of the financial markets.
Important points to note about our world
The world’s countries are divided up into First-world as well as Third world or emerging market countries. In a nutshell, first-world countries are capitalist, industrialised, and developed countries. Their currencies also tend to be strong when measured against the other world currencies.
For example, one of the biggest first-world countries is currently the United States of America. The United Kingdom, on the other hand, has the strongest currency when compared to other nation’s currencies. In other words, the GBP is seen as the lowest-risk currency.
Third-world countries consist of the poorest countries in the world, and they are the least developed. An example of a few of the leading third-world countries are India, South Africa, and Brazil.
On a personal note, I try and keep track of what is happening in the world on a daily basis. Consequently, I wake up every morning hoping that a new global crisis has not flared up. Why? Well, unfortunately, these crises tend to have a substantial impact on the world’s financial markets.
For example, it looks as the South African President is getting ready to fire the popular and fruitful finance minister. Consequently, the South African currency (ZAR) has dropped by about 4% in three days. Furthermore, speculation is once again rife that the country’s credit ratings will be downgraded to junk. The impending doom of the current finance minister has raised concerns about the viability of investing in both the ZAR and South African companies. Therefore, investors are selling the ZAR because it is considered too risky to hold which is driving the price down.
This information is probably irrelevant unless you are interested in investing in emerging marketing currencies. However, it also highlights the extent to which geopolitical crises impact on the global financial markets.
The Russian influence
Another current example of how a geopolitical crisis will potentially affect global financial markets is the protests that are spreading across Russia and Belarus. In this case, the oil price and the USD price might very well be affected.
Russia has been in the news a lot recently. Apart from the current unrest over corruption, There is the continued conflict between the Russian-backed rebels and the Ukraine army, as well as the allegations that Russia played a significant role in Donald Trump’s successful election campaign.
Tips to trade successfully
Should you wish to trade strongly on any one of the global financial markets, it is imperative to take note of the following tips:
Watch the global financial markets
It is important to note is that the markets influence each other. Therefore, it does not matter where you live; the other markets will affect your local market. You have a greater chance of trading successfully if you are cognisant of what is happening in all of the worlds financial markets.
Trade bravely, but cautiously
In order to trade successfully, it is important to define your goals up front, research the assets you wish to trade on thoroughly, decide on a trading strategy, and finally, stick to your chosen trading strategy.
One of the worst mistakes you can make is to take a decision on a particular trading strategy, change your mind halfway through, and then pull out of the trade before it expires. The aim of financial marketing trading is to increase your wealth portfolio; ergo, in order to prevent losses, you can add in stop-losses to prevent the loss of your initial investment when you place the initial trade.
There is no doubt that you can trade successfully in the current market volatility. The salient points are to make sure you understand the market conditions, study the price movements and other analytical data made available to you, and finally, do not second guess yourself.