Saxo Group
Summary: Throughout the first five months of 2020, the financial markets offered extraordinary trading opportunities, as huge volatility swings gave traders the chance to capitalise on both falling and rising markets. In this article, we look at which asset classes our 100 best-performing clients from each key region traded - and a clear trend emerges.
Top 100 – Global
Volatility across markets reached record levels within the first months of 2020, caused by the coronavirus outbreak tumult. The CBOE Volatility Index (VIX), which is one of the most widely used volatility indicators, reached an all-time high on 16 March when it closed at 82.69 – compared to 2.33 on 16 March 2019.
Saxo’s best-performing clients globally traded CFDs to take advantage of the extreme volatility, making use of their leverage and short-selling capabilities. Equity index CFDs were the asset of choice, accounting for more than 35% of all trades by our top performers worldwide. On average, these clients have generated a return of 103% year to date. The MSCI World index was down 4.15% for the same time period.
Top 100 – Denmark
Our 100 top performers in Denmark made use of equity index CFDs in every second trade, followed by a diversified allocation across asset classes. On average, the Danes yielded a return of 57% on their assets under management, while our most-profitable client generated a return of 162% from trading GBP/JPY and the US Dollar Index only.
Top 100 – UK
The UK’s top 100 traders had an overweight in equity index CFDs, with forex their second-most-traded asset class. Overall, these clients posted an average return of 70%, while the most profitable generated a return of 199% from equity index CFDs, single stock CFDs and FX spot, with the E-mini NASDAQ-100 their major income-maker.
Top 100 – Singapore
The top 100 traders in Singapore had an even bigger preference for equity index CFDs than both their Danish and British counterparts, accounting for 54% of all trades. On average, they made a profit of 68% and traded just over two asset classes each. The most successful Singaporean made a return of 119% from trading JD.com Inc, E-mini Dow ($5) and Nikkei 225, with the latter their largest revenue generator.
Top 100 – MENA
In MENA, the strategies – and profits – of our most successful clients differed significantly from other regions. FX spot was the most-traded asset class, followed by cash stocks and single stock CFDs. With an average return of 47%, our MENA clients were more than ten percentage points worse off than the Danes, Brits and Singaporeans. However, the region’s most successful trader made a profit of 102% from ETOs (exchange traded options), futures and CFDs. Their largest revenue streams came from two index ETOs, ETO SPX and ETO ODAX, which highlights the upside of trading volatility with ETOs.
The benefits of equity index CFDs in volatile markets
From the analysis above, you can see the majority of our most-profitable clients traded equity index CFDs to capitalise on the recent volatility. But what exactly is an equity index CFD and what are its benefits?
An equity index CFD is a derivative product that enables you to speculate on the performance of an entire stock market index, rather than buying individual shares. For example, with just one CFD trade, you can gain exposure to the performance of the whole S&P 500, or any other index of your choice.
When you trade an index CFD, you’re essentially agreeing to exchange the difference in price of an index from one time period to another. And as a CFD is a derivative, you can go both long and short – enabling you to profit from an index both rising and falling in value.
Learn more here or try trading our 29 different equity index CFDs in the SaxoTraderGO demo.
The value of equity index CFDs can go down as well as up. Losses can exceed deposits on margin products. As with other complex products, including CFDs and FX, equity index CFDs come with a high risk of losing money rapidly due to leverage. In fact, 71% of our retail investors lose money when trading CFDs. 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.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
