Day trading using speculative derivatives provides many great benefits compared to regular trading, especially during unstable and uncertain market conditions. Based on this insight, the most recent forecasts, and new regulations, it seems like there will be great opportunities to benefit from during the coming few months.
As we’ll explain in the following two sections, we should start preparing ourselves for some extreme price developments in the next two quarters. We are most likely going to see certain instruments skyrocket to new highs while others are going to plummet.
During these types of market conditions, nothing offers as many opportunities as day trading derivatives, such as contract for difference (CFDs) and spread betting.
By using this type of instruments to speculate on the market, you can quickly and easily invest in increasing and decreasing prices from the same brokerage account at the same time.
For example, if you see the price of a certain stock surge, you open a buy position on that asset while you simultaneously open a sell position for the falling crude oil price. It’s easy and accessible.
You can, of course, short trade stocks and commodities with regular brokers too, but it’s really not as practical.
2. The Looming Trade War
The ongoing trade war is perhaps the biggest reason why people are considering to take on derivatives trading this fall.
Right now, tariffs are increasing in both numbers and size, and there doesn’t seem like there will be an end to it anytime soon. And as the “trade talks” fail to produce progressive results, the stock and commodity markets are set to fluctuate more than normal, thus creating excellent opportunities.
3. The Booming Stock Market
Despite the fact that there is an ongoing trade war, American stocks are performing better than in many years. In fact, the American stock market is set to hit new all-time highs later this week and, naturally, this gives you an option to benefit from fast-growing stock prices.
At the same time, people are getting worried about the incredible growth we’ve seen in the
US since most other stock markets in the world are struggling. Usually, these kinds of scenarios indicate that the market is about to turn south. If this turns out to be true, there will be no better way to benefit from the crashing market simple derivative trading.
4. Using Regulated Brokers is Always Safe
But day trading can be dangerous and too risky, right? Not really. At least not anymore.
The truth is that there is a wide range of regulated, licensed, and legitimate CFD brokers that one can use to trade. These brokers are overseen by leading regulatory bodies in Europe and elsewhere in the world. In addition, they all operate under the MiFID which means you, your funds, and all of your personal information is kept safe.
Moreover, the company behind the brokers are regularly audited to ensure prices aren’t being manipulated.
That being said, no form of trading isn’t completely safe and you’re always at risk of you losing your invested money, but as long as you stick to regulated brokers, you will be kept safe from scammers.
5. Limits to Leverage Has Made the Market Safer
As if the regulatory oversight wasn’t enough, European trading laws just got much stricter.
Since August 1st brokers can only offer limited leverage and margin on assets meaning your investments will be much safer. In addition, all the regulated brokers are forced to offer negative balance protection to protect you from losing money you haven’t invested.
However, this didn’t use to be the case. But the updated rules have really helped shape a fairer and safer trading environment which has attracted new traders that previously stayed clear of the market due to these risks.