Looking Beyond the Stock Market: Day-Trading Alternatives

The days when trading was synonymous with the stock market are long gone. Increasingly, day and swing traders are turning to other investments and new traders are being lured by the promise of emerging markets, such as cryptocurrencies and CFDs. While traditional brokerages have tended to shy away from offering cryptocurrencies, new brokers, such as DeltaFxMarkets and CFDpremium have filled the void, giving traders yet another opportunity.

What makes cryptocurrencies so appealing is that the level of daily fluctuation is relatively high. In order to maximize profits from small movements in the markets, traders can make part of their purchase on credit. This allows them to buy a lot more Bitcoin (or shares of Apple), and to make more profits on each trade. Of course, not all trades are winners, and losses are also magnified. Some markets, such as Forex, an exchange that makes it possible to trade currencies in real-time, exhibit lower levels of fluctuation. Therefore, in order to make any significant amount of money, smaller investors need to rely on credit, known on Forex as leverage. Because cryptocurrencies fluctuate more widely, less leverage may be necessary, which reduces the risk associated with this type of trade.

Leverage on the stock market is often known as buying stocks “on margin,” and strict margin requirements have often limited traders looking to maximize their earnings. One solution is a relatively new type of investment called a Contract for Differences. By trading Contracts for Differences on a certain stock, rather than trading the actual stock, traders can get around these requirements. In addition, CFDs are an option for investors who live outside the United States and have difficulty opening a brokerage account that will allow them to access American markets. CFDs are commonly offered by online Forex brokers, such as DeltaFxMarkets and CFDpremium.

Another reason to seek out alternatives to the stock market is capital restrictions. Brokerages are required to ensure that day-traders keep a minimum balance in their account, making multiple intra-day trades without having enough money in your account will result in your account being flagged. Markets such as cryptocurrency and Forex provide greater flexibility for traders with lower amounts of capital.

Commodities, such as oil, and precious metals are also growing in popularity. Many Forex brokerages offer gold and oil-based CFDs, which give smaller investors a chance to make leveraged trades with the potential for huge profits. Of course, leverage can also mean loss of capital if the market goes the other way.

Each type of security has its advantages and disadvantages. As governments begin to regulate cryptocurrencies, it is likely that Bitcoin and Altcoins will become more conventional investments, and larger traders will enter the market increasing its overall stability. In the meantime, these emerging markets represent an opportunity for traders with less capital, just like when online Forex brokers came on the scene. As with any market, speculating is a risky enterprise, and extreme care should be taken. Only trade with money that you can afford to lose.

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