The 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, the financial markets have been opened to the masses, becoming a premier venue for making money online. In fact, millions of people from all corners of the Earth generate revenue as being either a full-time or part-time market participant. Given the breadth of modern forex, futures and equities markets, active trading has gone from being a side gig to a popular way of pursuing one's financial goals.
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 reliance of industry on internet connectivity reached a crescendo during and following the coronavirus (COVID-19) pandemic. In response to COVID-19, the business world turned to the online environment to circumvent newly enacted quarantines and travel restrictions. Subsequently, an unprecedented number of people transitioned from an office to working their full-time job from home.
Estimates from 2020 projected that as many as 1 in 4 professionals would work from home the following year (2021). All in all, the consensus was that many individuals would make money from home rather than from an office until the pandemic ended.
The capital markets represent a meeting of all three sectors: commerce, industry and finance. sales 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. No matter if you trade in your free time or invest for passive income, odds are you do so digitally.
The Forex Market
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.
Leverage: Leverage is a double-edged sword and can dramatically amplify your profits. It can also just as dramatically amplify your losses. Trading foreign exchange/CFDs with any level of leverage may not be suitable for all investors.
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.
Generally speaking, currency traders have at least one of the following objectives:
- Cash Flow: A portion of forex traders are looking to make extra money via the buying and selling of currency pairs. This is a common undertaking for beginners who want to take advantage of forex leverage to make money fast. While it's possible to make a quick buck in the global currency markets, the risks can be substantial.
- Earn A Salary: Many professional people view the forex market as a viable means of making a solid salary. To put it bluntly, this group wants to earn a lot of money as a full-time, fully-vested currency trader.
- Build For The Future: Investing in currencies is one way to achieve passive returns over the long-haul. Given the proper know-how, a person can execute longer-term strategies designed to capitalise on macro forex trends. However, within the forex investing realm, it's important to understand the influence of rollover costs and counterparty risks on decision-making.
No matter if your goal is to make some extra cash or a six-figure salary, taking an Introduction to Forex online course is a great place to begin your journey into the marketplace.
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 futures markets are legendary for volatility. Price action is extremely active in some products, as robust participation often leads to swift, dramatic moves in asset pricing. At the crux of futures contract volatility are two factors:
- Perishable: Each futures contract listed for public trade has an expiration date. At expiry, it becomes untradable. So, there is an inherent urgency for futures participants to craft decisions as their trade and investment timelines are finite.
- Forward-Looking: One of the primary reasons for futures volatility is that they price an asset at some forthcoming point in time. Accordingly, a wide variety of market drivers can impact a contract's perceived value ahead of expiration.
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. These days, the question isn't "can money be made online" but rather "how to make money online." Countless opportunities exist in the digital world, with creativity being the only constraint for the user.
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.
FXCM Research Team
FXCM Research Team consists of a number of FXCM's Market and Product Specialists.
Articles published by FXCM Research Team generally have numerous contributors and aim to provide general Educational and Informative content on Market News and Products.
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