How to trade sectors: Tech, commodities, indices, and more!
From oil to technology, there are many sectors in the global markets. Each presents unique opportunities and challenges.
Trading strategies in the Forex market won’t necessarily help you in the commodities market.
Today we look at trading sectors and have a great clip detailing some strategies that you can apply.
What are trading sectors?
Sector trading is used by traders who want to gain exposure to specific markets such as oil or crypto. If the economy is performing well, investors can choose sectors as well as stocks within those sectors that are increasing. Even if markets are down, there could be sectors and companies that are on the rise.
Sectors and markets
1 Commodity – Oil, gold, wheat, cotton
2 Forex – currency pairs such as USD/ZAR, USD/EUR, etc
3 Indices – markets such as the NYSE, FTSE
4 Stocks – Companies such as Tesla, Apple, Google, etc
5 Cryptocurrency – Bitcoin, Ethereum, Dogecoin
By pinpointing the hottest sectors, you could earn better-than-market returns by identifying and trading the best stocks within those sectors.
‘Some fantastic opportunities to trade’
Fred Razak, chief trading strategist at CMTrading said: “Sectors are categories of different types of symbols in a collection of trading symbols. For example, you can have sectors in various types of situations. You could say that indices are sectors or stocks are sectors, or you could say cryptocurrencies are sectors. Now in each sector, in each category, you have subcategories as well.
“For example, if you’re trading the indices and you’re trading specific stocks in the indices, they have specific characteristics such as bank stocks. These can include JP Morgan and Merrill Lynch. All these types of major banks are under that category of banks.
“There are other categories for example technology stocks. So why should you care? This is the million-dollar question, why are we doing this? At any given time, the markets trade in separate sectors. That’s really an important element to understand. When you see it overall, when you see what’s trading in relation to another symbol, then you’ll find there are some fantastic opportunities to trade.”
Watch the video below: