How to Make Profitable Trades During the Pandemic

Despite the global situation, the markets are still providing significant opportunities for investors to trade profitably. Here are 3 assets that traders can utilize to take advantage of current market conditions.

 

The global economic situation that has evolved in 2020 has created a major disruption in the general lives of people in most countries.

 

In this situation, many traders, both new and experienced, are curious as to how to adjust their trading strategies in these times and make solid forecasts for opening positions, not to mention which markets they should be focusing on during this time.

 

While nobody wants to downplay the seriousness of the current hardships and its subsequent consequences, as traders we need to find a way to turn a bad situation into a profitable one in order to maintain our livelihoods and reach our financial goals.

 

Therefore, we have put together a short list of 3 assets that traders should be watching closely and how to profit not only on these assets themselves, but utilize them in understanding how other markets will be affected.

 

One of the best ways to fully take advantage of the following advice is with Contracts for Difference and Fixed Time Trades, which provides traders two of the most powerful instruments to make money from the markets in the current economic climate.

 

By following these suggestions, traders will find profitable entry points into the market and be empowered with the knowledge to make better forecasts despite the present crisis. The screenshot examples shown are from Olymp Trade.

 

1. Gold

 

Gold has been trading above the 1500 level since late last year and with the advance of the current economic crisis, it has now broken through the psychological level of 1700. Typically, gold is a store of value for many investors who are worried about the global economy and so they move portions of their portfolios out of currency related assets.

Keep an eye on Gold as an indicator of whether the general forecast of experienced and wealthy investors is positive or negative. If you see it begin to climb, it is likely that stocks and major indices (Dow Jones, S&P 500, etc.) will begin to decline.

 

The converse is also true in that declining gold values are a good indication of positive movements in stocks and major indices. Both scenarios will generate good opportunities for traders to open profitable positions early before trends take a solid hold.

 

 

2. Brent Oil

 

Brent Oil is the most commonly traded crude oil commodity in the world. While there are other variants, most notably West Texas Intermediate (WTI), Brent is the benchmark for the price of oil globally.

 

2019 saw a significant increase in the amount of oil that was being stored, but not used. Inventories rose significantly during the U.S./China trade dispute and global demand began to wane. The current situation has only magnified the overstock of supply and despite efforts of OPEC and other producers such as Russia to limit production, the price has plummeted recently.

 

The oversupply of the market and the lack of demand were illustrated recently when WTI futures dropped into negative territory because there was no place to store additional inventories of oil. This forced traders to literally pay others to take the oil off their hands and gave the oil industry its largest hit in years.

 

The key thing to note with Brent is the demand side. With the current economic conditions in the U.S., the demand for oil has been cut drastically in the world’s largest consumer base and China, the world’s 2nd largest consumer, is just now restarting its economy.

 

Without an increase in demand from the developed countries of the world, namely the U.S., Europe, and Japan, the price of oil is not going to rise anytime soon. Therefore, keep an eye on Brent prices as any movement and sustained price above $40 a barrel indicates a significant increase in demand.

 

Movement in Brent will affect several currencies such as the Canadian dollar and Russian ruble as well as the stock value of many companies. If you see a sustained rise in prices, get a jump start on positions in USD/RUB, EUR/RUB, USD/CAD, and stocks related to oil production.

 

3. S&P 500

 

Many different indices around the world like the Dow Jones, Nikkei 225, and Hang Seng offer some insight as to the general health of the global economy. However, the S&P 500 index includes probably the best mix of U.S. stocks that will demonstrate investor confidence.

 

Last year saw a dramatic rise in the value of the S&P 500 in spite of the trade dispute between the U.S. and China and only tumbled when the U.S. started to become affected by the current economic crisis.

 

Any drastic movement by the S&P will give traders a good indication of investor confidence and should be watched diligently. Not only will traders be able to make great profits off any developing trend in the index, movement up or down will give a clear signal for other assets such as the American currency, stocks, real estate, and oil on the positive side.

 

On the flip side, declines in the S&P will signal opportunities for short positions in the aforementioned assets and for commodities like gold and silver.

 

Move Forward and Trade with Confidence

 

To take full advantage of the current market climate, investors need to monitor many things such as breaking news and economic indicators such as employment and GDP numbers, but the biggest money in the markets will already know about such things and their trades will affect the aforementioned three asset charts.

 

A diligent trader can make out very well in the markets right now by keeping a close eye on the three key indicators we mentioned above. While we are optimistic that the global economy will recover from this event quickly, we need to be prepared to profit off of further declines.

 

Therefore, having a trading account that allows investors to profit off of good and bad news is essential. Traders will want to be able to make “short” trades with their accounts, get as much free leverage from their brokers as possible, and limit their commissions in order to maximize their profit.