A Guide to Trading in Global Stocks

9 October 2017

At Day Trade the World (DTTW), we offer traders from around the world an opportunity to trade stocks from many exchanges from around the world. By giving them the access to these markets, the traders are able to take opportunities as they come. For example, if it’s a low volatility day in the US stocks, the traders can take opportunities in trading stocks from Turkey. While giving them this flexibility is good, traders need to follow certain guidelines when trading stocks from different parts of the world.

Trade on companies you know

As a trader, you want to have an easy time. You want to enjoy what you are doing. You also don’t want to rediscover the wheel. Since our exchanges have many companies that you know about, why not trade them? Why do you want to spend a lot of time researching about companies that you don’t know about especially when their information is not readily available? This is wrong and it could lead you to making significantly wrong mistakes.

Understand the politics of the countries

The political environment is very important in trading. As you have seen in the developed countries, the political environment is very important in determining the success of the stock market. For example, the South African market, once the leading African market has severely been affected by the political situation in the country. There have been attempts to oust the president which has in turn led to increased volatility of the market. The same can be said of countries like United Kingdom and Turkey which have seen increased political events.

You also need to understand the economic environment of the country. Just as it happens in the developed countries, in the developing countries, stocks are affected by the economic environment. Companies tend to do well in countries that have strong economies. You can do well by following the developments in these countries.

Have a solid and back-tested strategy

I have written about this several times now but its worth repeating. As a trader, you cannot succeed without having a good strategy that is well-developed and backtested. The reason why only a few traders succeed is that they take time to develop a strategy and backtest it. This is a slow process that can take more than one year to perfect. Sadly, many traders don’t have this time.

When you are trading global stocks, you need to take time to create a good strategy and back-test it. This strategy should be unique to the asset class or the companies you want to focus on.

The strategy here can mean a well-developed algorithm that tracks different stocks. It can also be an algorithm that tracks the indices from those countries.

Short Term

When trading stocks from the emerging markets, you should aim to enter and exit trades within a short period of time. You should not aim to become a long-term investor in these countries because of the volatility – or lack of it – in these countries. You want to buy or short stocks in the morning and exit them within a short period of time. Doing this gives you an opportunity to enter and exit while making profits and avoiding huge risks. Holding these stocks for the long-term exposes you to huge risks that are not necessary.