Since 2007, global stock indexes have caught a very volatile economic environment with the focal point being the trade war between the U.S. and China. Both countries have very different goals in mind with regard to trade. However, the potential for conflict is still present due to differences in their economic philosophies and goals as well as their national interests. This war is also believed to be having a domino effect as many nations are now feeling the effects of the worldwide economic slowdown.
Now that the U.S. is no longer engaged in military action in Iraq, many economic analysts are looking to the future and are predicting changes in the stock markets due to the slowing economy in the U.S. and slower growth in China. While there may not be a dramatic change, there will surely be negative effects on global markets. A key indicator of this changing sentiment is the falling of the Chinese stock markets. China’s economy is slowing down significantly due to belt tightening and slowing demand from high-end consumers. These trends are affecting global stock indexes just like the U.S.
In the past, most traders considered the Chinese markets to be safe since they traded much like the U.S. stock indexes. As the saying goes, everything is possible, but it is hard to do it frequently because of its complex structure. With time, a new trend has emerged on the trading scene known as digital derivatives which is made up of financial instruments that allow the trading to occur remotely via computerized trading platforms. The trading platform allows the user to execute trades utilizing virtual instruments such as stocks, options, futures and currencies.
However, with this new technology, the need for a traditional trading account has been eliminated. For many investors, it is difficult to remember the name of the company whose stock has dropped in price. With electronic futures trading, investors can trade on stocks of companies who have already filed for bankruptcy or have decided to pull out of the market. Dow Jones Industrial Average and the FTSE100 are two of the largest and most traded global stock indexes today.
The global stock markets are highly leveraged by high levels of credit risk, which can lead to large losses for the untrained investor. Leverage comes from the large number of shares available for purchase, along with high rates of trading activity. Large amounts of leverage can lead to catastrophic losses because many investors tend to believe that they can control the price of the security using their leverage. They may buy large amounts of a given security thinking that they can control the price if they want it to fall. However, they are greatly mistaken as it takes time for the price to drop below their investment.
When an investor is looking for stock investments which have the potential for large gains, they should stay away from the global financial markets and the U.S. stock markets at least during the fall. Investors should instead only look at emerging markets during this time frame. Emerging markets like the Brazilian Real and Chinese markets provide excellent gains for the investor due to their lower price per share and greater liquidity.
The best time to buy stock in the U.S. and the global stock indexes is when they are having their greatest value. Investors will find that trading hours will be slow during this time frame due to negative news affecting the economy. This will also make it difficult for traders to find a high volume low cost opportunity for them to invest in. In addition, U.S. and global stock indexes will be closed for a day due to holiday issues. Trading hours will be slow during this holiday as news reports are released causing volatility in the markets.
The best time to buy stocks is before the release of the financial report for the past two weeks. The release of the U.S. and global stock indexes will cause investors to be more volatile due to the fact that there will be new stocks being added to the indexes. The traders who are active during these periods will have the greatest chance to take advantage of these indexes. Traders should only buy stocks they can afford to lose. If traders are continuously losing money, they should look for new investment opportunities or move to other safer investments.