Financial Market Trading: Globalisation’s Impact on the World's Financial Markets

“Finally, I think we believe that when we see an opportunity, we have the duty to work for the growth of that international community of knowledge and understanding with our colleagues in other lands [...] We think of this as our contribution to the making of a world which is varied and cherishes variety, which is free and cherishes freedom, and which is freely changing to adapt to the inevitable needs of change in the twentieth century and all centuries to come” –  J. Robert Oppenheimer, The Flying Trapeze: Three Crises For Physicists

What is globalisation, and how will it impact our ability to trade successfully on the world's financial markets? There is much talk of both the positive and adverse impact of globalism and its associated geopolitical and socio-economic events on the growth of the international community and, by inference, the financial market system

Globalisation and its history

Before we look at how global events affect the world’s financial markets, let’s ensure that we have a clear understanding of what globalisation is.

global market

In a nutshell, globalisation is "the worldwide movement toward economic, financial, trade, and communications integration... [It] implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers."

It is easy to assume that globalisation arose as part and parcel of the Information Age with high-speed Internet connections as well as easy access to businesses and people all over the globe. However, globalisation is not new. People have been buying from and selling to each other from as early back as the Middle Ages. Trade routes such as the Silk Road traversed Central Asia connecting China and Europe. Similarly, people have been investing in overseas companies for thousands of years. 

Globalisation and the World’s Financial Markets 

According to Michael D. Bordo in his paper titled “The Globalisation of International Financial Markets: What Can History Teach Us”, “globalisation has become the buzz word of the new millennium. It is viewed as the cause of many of the world’s problems as well as a panacea.” Until a couple of years ago, the benefits of open capital markets included: “optimal international resource allocation; inter-temporal optimisation; international portfolio diversification and discipline on policy makers.” 

Unfortunately, with good cause, the prevailing viewpoint has swung from the positive to the negative. The ongoing global crises such as Brexit, the Arab Spring and continued civil war in Syria, Grexit, the election of Donald Trump as the 45th president of the USA, etc. have all contributed, and continue to contribute to the current financial market volatility and instability. 

Surviving the negatives of globalisation

To the uninitiated, and the expert pundit to a certain extent, it seems as though we never know what global events have taken place overnight and how the markets will react to them when we wake up in the morning. Consequently, this has led and continues to result in a certain amount of investor uncertainty, which in itself results in more market insecurity. 

Consequently, I believe that all of the above content begs the question, how do we make a success of trading on the global financial markets? The good news is that there are a few simple tips, which, when enacted correctly, will help us trade successfully on any one of the world's financial markets: 

Constant trading strategy revision

When the financial markets are volatile and unstable, it’s important to consider a short-term trading strategy such as day-trading. In a nutshell, day-traders make sure that all of their trading positions are closed by the end of each business day. They do not leave any trades open overnight; therefore, they do not wake up the next morning to any nasty surprises.

Online trading partner

Furthermore, it is critical that we select our online trading broker with care. It is vital that we do not leave anything to chance. On the one hand, if we choose a reputable trading partner such as Lionexo, we are guaranteed a greater chance of trading success. However, if we select the first broker we come across, we are opening ourselves to the risk of losing our entire investment.

Final words 

I believe that globalisation has both advantages and disadvantages. We have greater access to the world’s markets; ergo, more excellent opportunities. However, on the flip side, there is a greater responsibility to make sure that we trade with foresight, knowledge, and wisdom.

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