Our world is now in the Trump-as-president era. We are in uncharted waters. Ergo, no one knows what will happen next, and how it will impact the global financial markets.
Trump has finally taken office. He is in the first 100 days of his presidency, and he hasn’t wasted a moment before signing a plethora of executive orders including the banning of immigrants from seven different countries entering the USA for 120 days, for the implementation of the controversial Keystone XL and Dakota Access pipelines, for the repealing of certain aspects of Obamacare, banning international abortion counselling, and for the building of a wall on the border with Mexico.
The world’s financial markets are not enjoying Trump’s radical policies. “Markets were on the back foot after US President Trump announced one of his most radical policies yet, in the form of a travel ban… Investors are beginning to lose confidence in Trump’s ability not to cause damage to the US economy,” said CMC Markets analyst Michael Hewson. There has been some talk of his impeachment; however, it is unlikely while the Republicans control both chambers of congress. On a lighter note, new employment statistics published today announced that 200,000 new jobs were created in in the US in January. Many commentators are saying Donald Trump’s election victory has restored confidence and this is why unemployment is already falling. What will happen next? The short answer is, Nobody knows!
This then begs the question: ‘How do online share traders navigate the stormy seas of geopolitical and socio-economic volatility?’. In other words, how will the unsettled political and economic conditions impact your investments? Will your investments grow, or will they lose value at a rapid rate? In many ways it is fair to say today is just another day for the American presidency in general because every presidency since the end of the Cold War has been concerned by economic and financial tensions.
A layman’s guide to surviving market volatility
The good news is that there are ways to mitigate the potential damage that might be caused by troubled economic conditions. Here are a couple of ways you can do your best to ensure that your investments continue to grow, despite any prevailing adverse market conditions.
Partner with a reliable broker
The advent of high tech communications and computing devices and the ease with which the common man has access to the internet allows for a large number of online trading brokers to spring up. Therefore, it is important to ensure that the brokerage firm that you choose to invest with is reliable and bona fide.
Education and Research for Successful Investing
Research is a vital precursor to any investment decision. Success stories are written on the back of two kinds of research in particular – ‘Fundamental Analysis’ and ‘Technical Analysis’. A professionally qualified brokerage should provide you with these kinds of analyses.
Decide on an investment strategy
“To make the most of a market like the current one, smart long-term investors need strong stomachs and nerves of steel.” – Elizabeth MacBride
Are you going to implement a short- or long-term trading strategy? It all depends on how you interpret the global financial markets, and what your end goals are. As MacBride states, long-term investing is not for the faint-hearted. My personal opinion is short-term trading is probably the best way to go right now, as you can get in and out of the market in a short space of time.
One way to deal with current market volatility is to stop investing and sell all of your current investments. However, you are most likely to lose money if you employ this strategy. As difficult as it seems, it is important to keep your current investment; however, it is a good idea to re-evaluate your strategies in order to mitigate any losses you might be facing.
Diversify your portfolio
Invest in a wide variety of financial market assets such as stocks, commodities, Forex, and indices. In a nutshell, this means that you will mitigate some of the risk involved in trading in the current temperamental market conditions.
It is understood by most people that the current, changeable, global geopolitical and socio-economic conditions are around to stay for a while. I like to think of it as though we are riding on the waves of change toward a global digitally-linked, high-definition economy. Unfortunately, these waves have political implications which affect financial market volatility. Whereas volatility is a hazard, it can also be a source of great opportunity for financial gain.