The cyclical nature of the trading market often means good things can happen after a down year. In 2022, investors and traders found several challenges awaiting their financial decisions. The trends for online trading in 2023 look to be headed toward favorable territory.
Since the markets are still navigating the abrupt economic changes in 2020, the most significant trend will be to take a balanced approach. Portfolio diversity is a consistent priority, but expect its emphasis to be significantly greater this year than in the past.
Here are the other trends to consider for online stock trading in 2023.
Interest Rates Continue to Rise
Economic experts recommend raising interest rates when an economy starts overheating. This activity reduces inflationary influences while mitigating financial risks to individuals and organizations.
With all the money entering the economy coupled with supply chain issues and shortages, the rules of supply and demand say that prices should rise. It is harder to invest in new opportunities by making it harder to acquire debt. 1
Online stock trading will focus first on the companies that can profit from interest-earning opportunities. From there, traders and investors will diversify through promising dividend-earning stocks and ETFs focused on precious metals to balance their risk factors.
Defense Industry Opportunities
Russia’s activities in Ukraine have opened the door to potential long-term gains for businesses in the defense sector. The online trading opportunities for these developers are numerous as other countries look to stiffen their arsenals while the conflict occurs. 2
Although this option carries some controversy, any flashpoint creates a profit-making opportunity for industry companies. When the world becomes more dangerous, this sector sees a resurgence of trader interest.
Insurance Is Making a Comeback
Although the insurance sector doesn’t offer much excitement, it enjoys relatively strong demand each year. Even when price fluctuations create potential financial issues for individual or business clients, there is a constant need to protect assets.
People don’t want to lose a home or business to unexpected circumstances or natural disasters. Insurance lets them rebuild when the worst-case scenario occurs, which is why policies are repetitively renewed.
As more people return to the office in 2023, there will be increases in demand for various policies and coverage options. That correlates to a relatively predictable sales influx that keeps stock prices stable for online investors.
It’s not just the big industry names that benefit from a surge of interest when it occurs. Smaller, more regional providers will also likely see more clients requesting quotes. 3
Cryptocurrencies Offer High Risk, High Reward Options
At the beginning of January 2023, Bitcoin was trading under $17,000. In the next three weeks, it would rally more than 36% to hit over $23,000.
Although those figures are significantly lower than seen in early 2022, the volatility exposure to cryptocurrency is what online stock trading needs. Look for traders and investors to add ETFs based on Bitcoin for some extra diversity. 4
As with any ETF, investors should take time to look at individual holdings and investment strategies. Metrics like AUM, the expense ratio, and past performance might have additional influences, although previous results do not indicate future guarantees.
Home Goods Manufacturers Have Long-Term Positives
Many employees have been working at home for the past two years. Even though people are returning to the office, the extra time spent at the house has caused many household goods to see more than their usual wear and tear.
Appliance manufacturers are a particularly intriguing trend for online stock trading in 2023. With some of the biggest names seeing drops of 40% or more in year-over-year financial data, there could be opportunities to get into this sector at a time when families are contemplating purchases.
Additional time on the road for commuting means that vehicles will experience more wear and tear. Brands that support cars and trucks could see a surge in purchasing as more businesses put their fleets back on the road.
Logistics providers are another online stock trading trend to watch in this sector. The American economy in particular is fueled by commercial trucking. The most productive companies in this sector will be those that streamline operations while finding ways to increase revenues and reduce overhead.
Don’t Forget About Electric Vehicles
The riskiest online stock trading trend involves EVs. An uncertain economy makes people less likely to invest in cutting-edge technology, which means the companies involved in this sector might recover slower than other industries. 5
That includes established companies and those more in the research and development area.
Although trends can be hit or miss, they represent the areas where many traders focus their attention. If you keep an eye on these key points throughout 2023, you’ll be in a position to make some potentially profitable decisions.
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