The evolution and rise of the internet has greatly impacted the lives of people from around the globe. Social interaction, business and entertainment have all been revolutionised as a result of the advances in internet systems technology.
Perhaps the area that internet connectivity has had the greatest influence on is the financial markets. Not long ago the markets were largely off limits to the public, often existing as exclusive clubs. To become a participant was difficult, and engaging the markets meant overcoming considerable barriers to entry.
Now, due to advancing technology, the financial markets have been opened to the masses, becoming a premier venue for the potential of making money online.
The Digital Marketplace: Size And Scope Of The Internet
It's difficult to argue the degree of influence that the internet has upon the entire world. Globally, it's estimated that more than 3 billion people go online on a regular basis. In 2017, 90% of households in the U.K. alone had access the internet to complete everyday duties and tasks.
Traditional commerce has seen some of the largest fundamental changes of all. From the banking industry to retail sales, a tremendous amount of business takes place online. As an example, global online retail sales for 2017 are projected to account for 8.2% of total sales, a value of over US$2 trillion. Even more robust are the current levels of online banking usership. For 2016, 49% of all citizens in the European Union (EU) utilised web-based portals to conduct their banking.
The financial markets represent a meeting of both sectors. Markets around the world made the switch from brick-and-mortar institutions to digital venues due to the advancements in connectivity. This transition into cyberspace has increased the size and scope of the marketplace exponentially and created favourable circumstances for the remote securities trader.
Today, every global market of note exists as a digital presence. The trade of equities, derivatives and currencies is mainly conducted online.
The largest marketplace in the world is the forex. An exclusively electronic venue, the forex is an over-the-counter (OTC) market that specialises in the trade of foreign currencies. It is popular among participants of all experience levels, from novices to institutional traders and investors.
The following are a few reasons why the forex is attractive to aspiring participants:
- Business Hours: The forex is open for business 24 hours a day, 5 days a week. Extensive market hours give individuals with scheduling challenges the freedom to trade when they see fit.
- Liquidity: Efficient entry and exit from the market is possible due to the enormity of the forex. An unparalleled depth-of-market ensures the best possible price for trade execution.
- Availability of Leverage: High degrees of leverage are available to individuals wishing to increase exposure in the pursuit of enhanced rewards.
The global trade of currencies is a common pastime for millennials, professionals and retirees. Technology has made accessing the forex convenient and relatively simple. The ability to interact with the market online has made the once arduous task of trading currencies a preferred way of pursuing financial rewards.
Led globally by the CME Globex and Eurex, futures trading is conducted almost entirely online. Futures products are known as derivatives, meaning they are valued in relation to an underlying asset class. Energies, metals, equities indices and debt instruments are all available for trade via the global futures markets.
Futures trading exhibits a few unique characteristics that make it conducive to profit:
- Volatility: Depending on the market in question, the pricing of futures products can move quickly and dramatically. Volatility bolsters both earning potential and risk.
- Variety: Futures products face a wide-variety of assets. From crude oil to corn, it's possible to benefit from fortunate pricing fluctuations in any number of particular markets.
- Cost Effective: Commissions and exchange fees pertaining to futures products are relatively reasonable. The rise of deep discount brokerage firms have greatly reduced the fee structure involved in the trade of futures contracts.
The process of making money in futures is very similar to any other trading discipline. Profiting from an advantageous move in pricing (either up or down) is the name of the game. However, please be noted that futures trading may result in loss.
By far, the most traditional way to make money in the capital markets is to purchase and hold shares of corporate stock. Championed by the likes of Warren Buffett, "buy and hold" strategies are lauded by many as being sure-fire ways to preserve and increase wealth.
In contrast to forex and futures, the equities trade affords the individual several distinct advantages:
- No Time Constraints: When a stock is purchased, it is the property of the buyer. The buyer is free to hold it for as long as desired. There is no rollover or expiration to deal with in equities products.
- Vast Number of Options: Thousands of individual stocks are available for purchase on exchanges and the OTC markets.
- Value of Diversification: While a portfolio of currencies and futures may also be constructed, equities are much more flexible. Mutual funds, indices and sector-specific stocks may be combined with one another to minimise risk and maximise return.
Buying stocks online has never been easier. Gone are the days of needing access to a broker at the trading floor and absorbing huge transaction costs. Online discount equities brokerages offer exceptional service at low prices.
It is undeniable that the advent of the internet has connected the world socially and economically like never before. From this connectivity, countless new opportunities to prosper have arisen. The ability to work remotely has given individuals from all walks of life access to a host of professions that were not previously available.
The financial markets are a viable avenue to anyone with a computer, venture capital and an entrepreneurial spirit. If you are looking to make money online, then the active trade of securities on the forex, futures and equities markets of the world offer substantial earning potential. Please note that the active trade of securities on the forex, futures and equities markets carries a risk of loss.
Any opinions, news, research, analyses, prices, other information, or links to third-party sites are provided as general market commentary and do not constitute investment advice. FXCM will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
Senior Market Specialist
Russell Shor (MSTA, CFTe, MFTA) is a Senior Market Specialist at FXCM. He joined the firm in October 2017 and has an Honours Degree in Economics from the University of South Africa and holds the coveted Certified Financial Technician and Master of Financial Technical Analysis qualifications from the International Federation…