A Guide to Trading International Stocks – Introduction
Technology has made investing and trading easy for people from around the world. Today, it is possible for a trader in rural Nigeria to trade in stocks of companies like Microsoft and Apple. It is also easy for them to trade in commodities like Crude oil and silver without the need of owning the physical product. All this has been made possible by technology which is powering companies like Day Trade the World (DTTW) to provide these solutions. In the past, it was impossible to get live quotes from the major global exchanges. The trading platforms were also not there.
At Day Trade the World (DTTW), we provide global traders with platforms that power their trading needs. With our platforms, traders can buy and sell financial instruments like indices, stocks, currencies, and commodities. Contrary to other major brokerages, with our platforms, you can trade stocks of different countries.
The benefit of this is that you are at a good position to buy and short stocks of companies in countries like Turkey that you cannot find in other brokers. Having this variety of stocks give you a chance to diversify and also benefit from geopolitical events when they emerge. However, it also exposes you to significant risks that have the ability of affecting your account negatively.
The main challenge of investing or trading in global stocks is the limited nature of information that is available to traders. For example, if you are an Apple trader, you have access to all news events that come from the company. You also have access to analysis from leading analysts. All this gives you a chance to know the inner workings of the company. This is not possible when you are trading stocks of companies in other countries. These stocks are not heavily followed and the information is highly limited.
Another challenge with these stocks is that they are not as volatile as those of the United States and the European Union. This challenge means that the movements are not frequent. This limits the trader’s chances of making money. However, despite all this, it is possible to make a fortune trading these stocks.
First, you should identify companies that you wish to trade in these countries. Ideally, you should look at companies that have a good track record of volatility. In most exchanges, these companies exist.
After identifying the companies, you need to conduct a brief study about them. Learn about their businesses, their financial position, and most importantly, the date they are expected to release their financial information. Companies are usually more volatile when they release their financial results. Having this knowledge gives you an opportunity to avoid being caught inside a trade when the company is releasing its results.
Next, you need to study and backtest your strategy with the company or companies that you have identified. In this, if you have a system that you use, you should get the data and backtest it to measure the efficacy of your system. This is probably the most important step because it measures how you would have performed if you were in the market then. If the system is not accurate, you should work to fix it by introducing new parameters.
After doing all this research, you should now start trading. However, you should be very cautious by opening small trades that don’t expose your trades at risk.