As the new decade comes rolling in, it is important that you have your finger on the pulse of the top financial markets for trading. Expert investment strategy groups suggest that, for 2020, it’s going to be extremely advantageous to focus on stocks with high projected earnings growth.
There are a number of market-shaking events that shaped the past decade, and 2020 is set to become even more remarkable for the financial markets. This is due to the fact that there are currently so many impactful events across the Globe. These include things such as Brexit in the UK, which will also affect Europe and of course the US presidential election, both currently making waves in the financial markets.
Whether you are planning to venture into a new career, going full-time into trading, or are planning on something a little more passive, it is essential that you get to know the top financial markets for trading in the coming year. If you are an advanced trader or just a beginner trader and you are not quite sure where to start, don’t panic just yet! We have crafted this quick crash-course to set you on the right path to trading. Here are our top Financial markets you should be trading in 2020.
The Current financial markets in 2020.
In a nutshell, a financial market is a market in which buyers and sellers have the platform to trade foreign exchange, commodities, financial securities, among many other freely exchangeable items. The prices in the financial markets are determined by market forces, and this is where trading happens on both a national and global level.
It is the main job of traders to buy and sell securities in the market in order to gain potential profit, all while doing their best to minimise risk. The common trend among seasoned traders is that they focus on a single financial market, and it can be quite unlikely that traders tend to dabble in varying ones. Having a solid understanding of a particular financial market and staying up to date with the latest impactful news can be quite demanding, this is why traders tend to specialise. Especially traders who are just starting out or are looking for a passive return on their investment.
However, even if you decide to put all your attention in just one financial market, it’s still of great benefit if you have an overview of all the financial markets that are available for trading. This is because they all function in a sort of web that can impact one another. Awareness is key and knowing about and understanding all the markets will give you an extra advantage. Thus, we will then give you a bird’s eye view of all the most important financial markets out there, and what their global roles are.
LEARN TO TRADE THE TOP FINANCIAL MARKETS IN 2020!
How are financial markets different?
The most important term here is “market” because the financial market functions pretty much the same way. Markets are where goods and products are sold and bought, but the difference lies in what is being exchanged; In financial markets, you would see the act of buying, holding, and selling of financial securities, instruments, and products instead of food, clothing, or any other tangible product or service.
It is a common misconception among beginners that there is only one financial market but, the truth is that they have grown exponentially over the years! Here are some of the most common kind of financial markets:
- Derivatives markets
- Foreign Exchange market / FX
- Capital markets
- Commodity markets
- Cryptocurrency markets
- Money markets
- Insurance market
- Mortgage market
Why are financial markets so important?
Financial markets are incredibly essential to the economy because they offer these six functions:
- Efficiency
- Risk sharing
- Price determination
- Liquidity
- Information about the flow of funds
- Liquidity
These financial markets are what keep the gears moving with regard to the flow and movement of funds within global markets and the overall economic system. They have had a consistent role all throughout history, with the dawn of technology introducing even more ways for international markets to become intertwined. Thus, these connections are what helped financial markets grow into what they are now.
Best Financial Markets for Trading in 2020
If you are still unsure of which financial market you should be delving in, then let us help you out with this guide. We have compiled the best financial markets to trade in for 2020! All you have to do is read on and find out which fits best for you, your lifestyle, and the budget that you have.
Stock Market
The stock market is unarguably more prominent in certain countries, but it is certainly a pillar in the economy of most countries. The stock market is a type of financial market in which financing revolves around the buying, issuance, and selling of shares of stock.
If you are looking for long-term investments, then the stock market may be the perfect choice for you. The US stock market has grown incredibly over the past decade and is predicted to become even bigger this 2020.
Within the last 100 years, the US has achieved market dominance, consolidated their exchanges, and a secular sector rotation has occurred. This graph from Yahoo Finance shows the contrast between the world’s stock markets in 1899, and 2016.
Stock Market: Best for Medium to long investments.
Forex Market
The forex market has demonstrated an impressive growth from $5 billion in 1977 to over $5 trillion in 2017. Big numbers! This steady increase has been thanks to price volatility, advanced computers, more trading tools and access to information, and even the advancement of technology. Think about personal computers and how easy people now have access to these markets online. The barrier to entry is much smaller and the potential of becoming a forex trader is much more accessible. You can also join our Forex trading course to assist with your journey.
If you are seeking to trade in a market that is leaning towards short and medium-term trading times, then the forex market may be the one you are looking for. There are tons of classes, crash courses, and resources available online for you to kickstart your trading journey!
Forex Market: Best for shorter-term trading & new traders
Bond Market or the Real Estate Market
In terms of bond markets, these are where financing is derived through the issuance, buying, and selling of bonds. It is considered a capital market since it can also give financing for long-term investments, but it is not limited to just that! It is possible to buy or invest in bonds that have maturities of less than a year. These are usually considered to be sold in money markets.
On the other hand, the real estate market is one where financing is provided through the buy and sell acts of properties. Out of all the examples we have on this list, the real estate market is a prime example of a capital market since the properties are held for multiple years, and are illiquid.
Bond Market: Best for long term investments.
Derivatives Market
The derivatives market is a type of financial market for instruments such as underlying assets and financial derivatives. There are four types of participants in the derivatives market, namely: hedgers, margin traders, arbitrageurs, and speculators. There are also for main types of derivatives contracts, which are futures, forwards, swaps, and options.
Speculators take on the task of using instruments to hedge against risk or to take on that risk presented to make a potential profit.
Derivatives Market: More experienced traders.
Cryptocurrency Markets
This is one of the newest types of financial markets, but it has certainly made an impact on traders all over the world. Bitcoins and other forms of Altcoins even took center stage in many news outlets in the past decade, due to the strong surge of price volatility that caused a surge attracting many newbie traders. Bitcoin, in fact, gained 8.9 million percent over the last decade, a staggering increase making it the best investment of the last ten years.
The path that cryptocurrency markets will take is still quite uncertain, and it is all up to 2020 and the coming years to determine just how it can shape financial markets in general. We advise that you should do your research before getting into cryptocurrency, as it is an extremely young and volatile market and presents a high risk, high reward approach to trading.
Cryptocurrency Market: High volatility best for big returns but much riskier.
There are many types of financial markets around, and it is all about finding the one that will fit your preferences and your budget. However, there is one thing that cannot be denied among all of them: financial markets play a lead role in the success and strength of an economy,
Final tips for trading financial markets in 2020
Before jumping headfirst into investing in a certain financial market, be sure that you have a solid understanding of it and if it meets your criteria. While you cannot know for sure the next movements in the economy, it is important that you have an accurate view of the potential risks and rewards that are attached to every move you make. After all, it is your money that you're putting forth, so it is best that you make wise and well-calculated decisions.
For a short period, we are offering a free review and consultation to those looking to start trading in the financial markets. There are limited spots so sign up here now.
Hopefully, you have enjoyed today’s article. Thanks for reading!
Have a fantastic day!
Nisha Patel
Live from the Platinum Trading Floor.