The financial market involves a variety of different products, covering several major areas including gold, stocks, commodities, foreign exchange and bonds, and each market has different characteristics. From a macro perspective, each market trend has its own rules. If investors understand this rule before entering the market, it will help to simply analyze the development of the market.
The following will introduce several popular trading assets and the factors that affect their trends.
Stock: A type of security issued by a private company to investors in order to raise funds. It is generally regarded as a risky asset, so its value and stock index are prone to rise and fall with the economic cycle.
US Dollar (USD): As the world's economic leader, the US currency has special properties. In recent years, the US dollar has often been used as a safe-haven currency. On the contrary, the safe-haven effect and performance of the traditional safe-haven currencies, the Japanese yen and the Swiss franc (JPY & CHF), are fading in recent years. Under normal economic conditions, the strength of the US dollar is closely related to the development of the US economy, that is, the trend of the US dollar can be inferred from the monetary policy of the Federal Reserve. If the Federal Reserve adopts a loose monetary policy (lowering interest rates), its exchange rate usually weakens; conversely, if the Federal Reserve tends to tighten monetary policy (raising interest rates), it may lead to a stronger exchange rate.
CAD and AUD , etc .: collectively referred to as commodity currencies or risky currencies. The strength of such currencies is highly related to the economic structure of their countries. For example, for export-oriented countries, the quality of export revenue can absolutely influence the exchange rate. In addition, commodity prices are an important factor, considering Canada as an oil exporter or Australia's natural advantages in the trade of metals such as coal and iron ore.
Gold: Gold is considered a safe-haven asset by investors. Although it is an interest-free asset, it is still considered a tool to fight inflation. The value of gold has been recognized many times in troubled times. For example, when there are unstable factors such as economic recession, war, trade disputes or sanctions, gold will be sought after by investors. Therefore, the performance of gold prices can also reflect the good or bad market sentiment to a certain extent.
Crude oil (OIL) : It is a commodity, and its trend is closely related to economic development, geopolitics, and weather factors. The main factors affecting crude oil can be roughly divided into supply and demand. The supply side refers to the changes in production increases and decreases of OPEC and other oil-producing countries, and the demand side refers to changes in the global economy. The combined changes in supply and demand affect the price of oil.
According to the laws of the financial market, if investors can understand the current level of greed or fear in the market in advance, they can make a better investment plan. Market sentiment can be roughly divided into two types: risk aversion and risk preference, that is, risk aversion and optimism.
If there are uncertain factors, investors will naturally want to avoid risks and take defensive and hedging actions. Gradually, the fear in the market will be amplified, and strong risk aversion will drive the performance of safe-haven assets. Risk preference means that the greed in the market is amplifying, and investors are willing to take more risks to pursue more returns. At this time, investors' operating strategies tend to be active, short-term buying and selling, and assets with risk preference categories will perform better.
More experienced investors simply assess the heat, atmosphere and market themes of the investment market by examining the performance of various products on the market.
All financial products traded on margin carry a high degree of risk to your capital. They are not suited to all investors and you can lose more than your initial deposit. Please ensure that you fully understand the risks involved, and seek independent advice if necessary.