Expand your trading horizons
Summary: Multi-asset trading can mean more opportunities and flexibility
Multi-asset trading can mean more opportunities and flexibility
When it comes to the markets, opportunity doesn’t only knock once. Every market brings multiple trading opportunities – and risks. Fortunately, there’s a way to both expand your trading opportunities and control your risk with one simple strategy: diversification.
- Grab opportunities
Traders have a habit of finding a niche – often their home stock market – and putting all of their capital to work in one area. While it’s easy to stick to your home turf, it also means you could be missing out on trading opportunities in other markets just over the horizon.
Remember the summer rally in gold in 2019 or the recent spate of unicorn IPOs? Step outside your niche and you’ll find there’s always a bull market somewhere – potentially offering even better returns.
- Diversification 101
If you trade stocks, you can diversify by looking at different sectors and regions, or you can branch out even more with assets such as bonds, currencies or commodities. That’s exactly what the major asset managers do to maximise their returns and build strong portfolios. Wherever you venture, just be sure to do your research and stick to your overall trading plan.
- Take control of risk
As a trader, your most important job is not to catch the big moves or let your winners run. Your job is to grow and protect your capital. And with risk becoming the new normal, it’s critical that you build a portfolio that can withstand every headline, tweetstorm or economic announcement that the market might throw at you.
Controlling risk isn’t as daunting as you may think. When you diversify, you’ll also be implementing basic risk management. By gaining exposure to more sectors, regions and markets, you reduce concentration risk – being overly weighted in (and sensitive to moves within) one type of investment – and ensure your portfolio has the balance it needs.
Whether you choose “safe haven” investments such as government or corporate bonds or diversify into popular commodities like oil or gold, multi-asset trading can help keep risk in check – and put more opportunities at your fingertips.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.