Best Investments in 2021
Below we have covered some of the top investment in 2021. We explored 4 different markets one may explore and decide whether to invest or trade right now.
If you would like to signup to our trading signals you may explore what we offer on the website and our performance (2014 – 2021).
These are among the top markets to invest or trade:
Following the rise in Bitcoin and Robinhood popularity for trading, more and more individuals are considering investing their capital in the leading markets. The exposure of investments across social media channels is a contributing factor. If you found yourself here searching for what to invest in we hope we may provide some guidance.
Although there are many forms of investments such as Real Estate, we will be focusing on financial instruments. The instruments include currencies, commodities, stocks (shares) and crypto.
Many individuals are trading forex rather than investing. There is a key difference between investing and trading. For example, you may purchase a foreign currency as you expect to significantly strengthen over the coming years.
The Lebanese Pound (LBP) is currently worth $1,507. An investment would be to physically purchase LBP if one expects the currency to strengthen. If in 5 years 1 LBP is worth $10 a significant profit will be made. Please note this is merely an example how to invest in foreign currencies and not a recommendation.
Trading does not require several years in order to earn a profit. In Forex, a currency is traded against another currency, such as EURUSD. The currency rate constantly changes throughout the day. Traders may virtually buy EURUSD at 1.1800 and look to sell at 1.1830. The price difference is 30 pips, which is the profit.
Trading forex often takes place in a trading platform that is offered by a forex broker. There are many types of platforms such as the MetaTrader4 (MT4), MetaTrader5 (MT5) and more.
The value of the pip depends on the invested capital. In EURUSD, 1,000 is 10 cents a pip, 10,000 is $1 per pip, 100,000 us $10 a pip and so on. You do not require 10,000 in order to place a trade of 10,000, In Forex (as well as other markers) there is leverage that you may yes.
If the leverage is 20:1 for example and your account balance is $10,000, you may open a trade up to 200,000 (approx.) and the profit or losses will be in pips. A 200,000 trade in EURUSD is $20 per pip. More information on forex trading can be found in our forex trading guide.
In forex trading some aim to profit only several pips (known as scalping), some are day trading (no trades are rolled over to the next day, intraday time frames are used such as 15min, 60min etc.) and there is swing trading. In swing trading the trade is kept open for several days, sometimes even weeks.
Some traders do keep their trades open for several months, some even as much as a year. Despite the long duration it is still considered as trading rather than investing. In the forex signals we offer we focus on swing trading.
If you are interested in forex trading or you are already trading forex, see some of our past trading strategy for EURUSD as an example.
Similar to forex, commodities are often traded via a trading platform. There are futures and Contract For Difference (CFD). We should say that there are also futures and CFD’s for currencies.
Commodities are split into different categories. There is energy which includes crude oil and natural gas for example. There are metals such as gold, silver and copper for example. The third category is known as agriculture, which includes wheat, corn and rice for example. The fourth category is livestock, which includes pork, cattle and eggs for example.
Futures trading is similar to forex where leverage is also provided by the broker but the margin requirement is often higher. The volatility in gold (XAU/USD) compared to a currency pair such as AUDUSD is significantly higher. Trading futures may mean greater profits but the same applies for losses.
Investing in a commodity can be done via futures, however, what some tend to do is following. If for example you expect crude oil (WTI) price to rise, energy stocks, US oil companies may benefit from the rise in oil prices. Another way is to invest via Exchange Traded Fund (ETF) that includes oil stocks.
Crude oil is just an example, the same applies for coffee, soybeans etc. See our past crude oil trading strategy.
Since Robinhood’s hype where a large US hedge fund was stopped out on shorting GameStop, the interest in stocks trading or shares is on the rise. Social media channels such as TikTok, Reddit and Telegram contributed to the stocks trading.
As opposed to currency pairs, a stock may rise 20% in a single trade where in currencies it is not the case. It does not necessarily mean that forex or futures trading are less profitable.
Every 3 months (known as a quarter) companies release their earnings report (in commodities the USDA report triggers most of the volatility). Prior to the release of the earnings analysts have forecasts. If the earnings report beats the expectations the stock tends to rise and vice versa.
If the earnings report falls below the expectations the stock tends to be sold. Similar to commodities, there are different categories in stocks. Tesla gained immense popularity due to Elon Musk. Last year in April 2020 Tesla was approximately $110, in April 2021 it is currently well above $650.
Trading stocks is similar to forex and futures trading (there are stocks futures as well). The main difference are the trading hours. While you can trade in the Forex market 24 hours a day aside the weekends, stocks are confined to specific trading hours.
Investing in stocks in ETF’s is fairly straightforward. You buy stocks and hold onto them. Trading is the same concept as futures although you may require more capital for day trading every day in the US due to the regulations.
Trading options may be applied to all of the above instruments. Options trading requires less margin when compared to equities, which may be deemed as ‘less risky.’
To simplify what an option is, if you believe a stock that is currently worth $20 will reach $25 you would place a call option. If you however believe the stock will reach $15 you will place a put option.
Each option has an expiration date. There may be weekly expirations or end of month expirations. If a call option was placed on a stock that is worth $20 and you expect it to reach $25 by the end of the month, when stock is above $25 it is referred to as in the money. The $25 is the strike price.
The profit one may make from options trading varies but as opposed to forex where the profit is in pips, in options the options it is in percentage. If for example $20,000 were placed on a call option, the profit may be anywhere between 10% to 50%. See the expirations calendar for example.
Similar to all instruments, trading options is often done via a financial broker.
Cryptocurrencies’ investors often buy the cryptocurrencies in an exchange and hold onto them for some time. Many would like to see their purchased cryptocurrencies explode like Bitcoin (over $50,000 at the time of this writing).
Cryptocurrencies can be bought form exchanges such Binance or Coinbase or from individuals in social exchange platform. Holding onto the cryptocurrencies can be via an online wallet, trezor (very popular) or what is referred to as cold storage. Keeping your cryptocurrencies secure is essential.
Many exchanges were hacked over the years and many scammers find creative ways of stealing bitcoins. Security is a top priority in this market.
There are thousands of cryptocurrencies, referred to as altcoins. Attempting to determine which crypto is likely to burst higher is fairly challenging. There are cryptos such as Dogecoin and Cardano that were heavily promoted across social media channels.
Trading cryptos is done via exchanges and in trading platforms in the form of a CFD. Some brokers offer very high leverage for trading bitcoin as a CFD but the risk of such leverage is very high.
In ddmarkets we provide trading signals for online traders in Forex, Commodities, Indices and Crypto. Sine we launched in 2014 most our signals are focused on the Forex market.