Recent developments in trading business

When we talk about finance and education in finance then we have to consider one very important fact: Things change and they change dramatically. When you compare the finance industry in 2001 and 2013 you will see that there were lots of changes. Almost everything we knew about markets became irrelevant or at least less relevant. When we take a look at concepts like Markowitz portfolio theory: the economic crisis in 2007 – 2009 has proven it wrong. The theory said that we can build a portfolio to minimize our risk with assets that don’t are not correlated. The problem though was that these correlations were completely wrong when stocks crashed. It did not matter if you had Coca-Cola, Google or Home Depot stocks – they all went down with almost perfect correlation even though there has been only little correlation before. This makes a pretty risk free portfolio a very risky one!

But there are also trends we have to keep in mind. CFD trading, Forex trading and binary options make it very easy to trade virtually but for real money. These are all very high leveraged products that enable investors to earn high yields but also mean that risk is very high. Binary options are a very simple form of trading, maybe the easiest one. You only have to learn about the basics and can start trading right away. It’s more like betting on the outcome of a certain event. Whether the price for EUR/USD will rise or not. Simple things like that. That means that it looks very easy but it’s still trading and requires you to understand the markets, do proper analysis and so on. Just because it looks easy does not mean that it really is. So you should be very cautious when trading with new products like that. It doesn’t mean that these are scam or just bad. Forex trading for example can be very lucrative. But you have to be very careful and can’t just start out and earn money. It doesn’t work that way!

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