After the coronavirus outbreak and subsequent global economic recession, almost all changes this year have affected almost every aspect of personal and business life. With financial markets turbulent, the world of online trading is no exception.
Although the global market has been on a roller coaster of various geopolitical tensions, the market volatility we have witnessed since March is undoubtedly different from any time before. This is indeed a challenging time, for the online trading community, the increase in volatility has proven attractive to those who wish to profit from it.
However, as the opportunity for more profits also brings the possibility of loss, how will the online trading landscape be changed in 2020, and how can retail investors stay safe?
Lockdown boost
For some time, the interest rates offered by banks and other traditional forms of consumer investment have not been encouraged, but due to the current economic fragility, the Bank of England has reduced interest rates to the lowest level in history. This makes many people looking for more exciting and beneficial ways to increase their savings, which is indeed what online transactions can provide.
When this year’s pandemic was pandemic, the number of users who widely reported online transactions surged because of disappointing savings rates and because the enforcement of lock-in measures allowed more people to learn new skills and educate online transactions.
The volatile market undoubtedly provides huge profit margins and new sources of income for those who can prove their beliefs. However, where people have the opportunity to profit from market fluctuations, they may also suffer losses, especially for those who are new to online trading or who are still developing their understanding of the market.
The rapid increase in online transactions due to lock-in, coupled with the unpredictable global economy this year, has caused some financial losses, but since there are now many risk management tools, this is not necessarily the case.
Protect your assets
Although not yet widely used throughout the retail market, risk management tools are gradually becoming more and more popular and are provided by online traders as an additional safeguard for those seeking to trade in a high-risk environment.
Traders have many choices, but the common tools are “take profit” orders and “stop-loss” orders. A take profit order is a limit order that specifies the exact price at which the trader will close the position to make a profit, and if the price of the security does not reach the limit price, the stop loss order will not be realized.
A stop-loss order can limit the loss of a trader’s safe position by buying and selling stocks when the price reaches a certain price. Take profit and stop-loss orders are very good for mitigating risks, but for those who are new to the game or want additional support, there are even some risk management tools, such as AvaProtect, which can provide comprehensive protection within a specified time to prevent loss.
This means that if the market moves in the wrong direction, instead of initially expected, traders can make up for the loss, minus the cost of obtaining protection. To this day, without this news, the financial markets have changed, and the days have passed. Until a cure for the coronavirus is discovered, we are unlikely to return to “normal” levels, and the global market will continue to remain highly volatile.
Also, later this year, we will witness the most crucial presidential election in the history of the United States, and the Brexit transition period will end. The results of these events are likely to trigger further turmoil.
Of course, this may also encourage more people to devote themselves to online transactions to obtain profit opportunities. As more and more people become interested in online trading platforms and register, providers will certainly seek to increase or improve the risk management tools provided to try to attract new users, which will create a new era in the online trading world.
