For new businesses entering highly competitive industries, earning a consistent income on the side could be the difference between survival and failure. Many entrepreneurs look to enter secondary markets, but, with so many different avenues available to you, narrowing down your options can be difficult.
Here are three of the most common trading markets that your business could benefit from:
The foreign exchange market, known as forex for short, refers to the practice of buying and selling currencies. Because fluctuation in the market is typically very small – usually less than 1% – you may think that forex trading is only suitable for those looking for a long-term investment. However, day trading is also actually extremely popular as this allows investors operating on a large scale to take advantage of the small fluctuations to produce considerable profits. Compared to other markets, getting started is relatively simple and there are a number of guides on what you need to know.
CFD trading, short for contracts for difference, is an agreement between two parties to exchange the difference between the opening price and the closing price of a contract. This is similar to traditional share trading except that, when you purchase a CFD, you’re not actually buying or trading the underlying share. Rather, you’re buying the contract between yourself and the CFD provider. This means that there’s no need to tie up the full market value of purchasing the equivalent stock position and traders can instead open larger position than their capital would normally permit.
Finally, spread betting allows you to speculate on the movement assets without actually owning them. All you have to do is predict the outcome and the degree to which you are right or wrong will determine your profit or loss. For example, if a company is about to release its quarterly results, you can place a trade whether you think this will have a positive or negative effect on its overall value. Spread betting has been increasing in popularity in recent years, namely due to absence of stamp duty – saving you 0.5% compared to a traditional share purchase – and the fact that spread betting is not subject to capital gains tax.
Whatever market you find yourself in, you’ll need to ensure you have all of the information you need to make the best decision. ETX Capital gives you access to up to 6,000 markets, and can help you stay informed.