Expanding your trading activities into the global marketplace gives you many more options and theoretically gives you a much better chance of trading success. In practice however, many people find it overwhelming. It’s impossible to keep track of everything that’s going on and it can be difficult to know where to begin with developing your global trading strategy. These five tips will help.
Shape up your geography
There are differing periods of downtime in the stock exchanges of different countries which you will need to be familiar with if you’re going to buy and sell there. Interactive trading maps can help you keep track in real time, but it’s a good idea to do some basic initial research on each country where assets you plan to buy are based.
Select a variety of asset types
Different countries offer different type of asset, and you’ll also have the option of buying through packages like ADRs and GDRs or international mutual funds, which reduce the amount of work necessary to identify individual options with high potential for profit. Spreading your investment across different asset types gives you added stability as it reduces the potential for market upsets affecting them all at once.
Explore different sectors
As you explore the global markets you’ll find that the value of individual sectors differs significantly from one country to another. That gives you the opportunity to focus on sectors for which you have an affinity, rather than scanning the domestic markets for whatever happens to be doing well. Most top international investors have two or three sectors in which they specialize. Take the time to work out which would best suit you.
Get to know Australia
There are lots of different national markets out there to explore, but one place that’s undervalued at present – and is likely to start growing fast – is Australia. While it has the advantage of being an English-speaking country and thus having good trading relations with the US and Canada, it’s somewhat sheltered from the political and economic upheavals currently affecting the northern hemisphere. The Stockies awards for Australian brokers can help you find a good route in.
Consider forex trading
When you’re trading internationally you’re always vulnerable to shifts in the currency market. Doing a bit of forex trading on the side can effectively enable you to insure against losses incurred in this way, giving your portfolio more stability. It’s a technique frequently used by the big international banks, but because you can engage with forex using quite small amounts of capital, it can be adapted to suit small traders well.
Experience is a great teacher, and the more time you spend getting to know the global marketplace, the better your international trades will go. Remember that there’s no obligation to jump in at the deep end – you can always engage in some fantasy trading initially, to help you figure out how it all works. then when you do start trading for real you’ll be a stronger position and more likely to achieve your goals.