{"id":12234,"date":"2010-08-20T13:41:35","date_gmt":"2010-08-20T17:41:35","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=12234"},"modified":"2010-08-20T13:41:35","modified_gmt":"2010-08-20T17:41:35","slug":"what-lessons-can-be-learned-from-the-global-financial-crisis","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/08\/20\/what-lessons-can-be-learned-from-the-global-financial-crisis\/","title":{"rendered":"What Lessons Can Be Learned From The Global Financial Crisis?"},"content":{"rendered":"

By Jonathan Dayan<\/strong> – It\u2019s no secret that the global financial crisis has had an enormous impact on the way people invest. The shroud of mystery which once hung over the financial markets appears to have lifted for good. In the aftermath of the crisis, millions more people have been investigating alternative investment opportunities like online financial trading. \u00a0In general, these people are united in seeking investing opportunities that enable them to exercise more control over their investments than traditional investing opportunities allow. What lessons does the financial crisis offer to today\u2019s financial investors and why has it led to increased interest in online financial trading?<\/p>\n

The collapse of major global financial institutions like Bear Sterns, Lehman Brothers and Northern Rock sent shockwaves through the world\u2019s financial system and nearly caused its collapse. One consequence of this was that investor\u2019s faith in financial experts was badly shaken. People realized that if there was the potential for real risk even in so-called \u201csafe institutions\u201d like banks, then handing over their money to experts to invest on their behalf wasn\u2019t really that different to investing their money themselves \u2013 and could even hold more risks and disadvantages. In the wake of this rupture in financial systems, ordinary financial investors have been reassessing their financial investing options.<\/p>\n

The Rise Of Self-Controlled Investing<\/strong><\/p>\n

One of the lessons people have been drawing from the financial crisis is the risks that are incurred in handing over their funds to third parties to invest on their behalf. \u00a0The images of thousands of investors queuing at the doors of major banks which illuminated TV screens around the world just two years ago are still seared on the minds of many investors. As a result there has been an increased interest in online financial investing from many people because it offers a way for investors to keep their investment funds under their own control. In online financial investing every investor makes their own decisions on what assets to trade, when to trade them and when to exit the markets. Investments are not locked away over time but are at the direct control of the investor 24 hours a day. This offers investors the freedom to invest in the way that suits them best, rather than forcing them to accede to a predefined investment structure as most banks and investment funds force their customers to do.<\/p>\n

Open Investing<\/strong><\/p>\n

Behind the global financial crisis there lies the specter of secrecy. The shock collapse of major global financial institutions and the scandalous fall of financial investor Bernard Madoff serve to highlight the vulnerability of traditional approaches to savings and investments \u2013 namely that they involve handing over your finances to a third party the security and competency \u00a0of which you can never be wholly clear about. Prior to the global financial crisis the financial industry was characterized by a lack of transparency. Traditional financial investment firms were opposed to openness in their investment procedures, a strategy which in the event cost their investors dearly. Following the global financial crisis ordinary financial investors are far more suspicious of secretive institutions and rightly so. Put simply, if you can\u2019t see where your money is going can you trust that it is truly secure? As global taxpayers and investors learnt to their cost through the crisis, the answer is that you can\u2019t. Online financial trading offers a different way for you to invest, where you can see exactly how your investments are faring at all times, and you can know exactly where your money is being invested.<\/p>\n

The Obsession With Volatility<\/strong><\/p>\n

Perhaps the most salutary lesson from the global financial crisis was the stark reminder that financial markets can fall as well as rise. For many years prior to the crisis investors had become acclimatized to rising markets and had begun to share the view that the rises would continue forever. The investment strategies of millions of investors were built upon this expectation. In the financial crisis, however, the world was delivered a wakeup call major financial markets and institutions sustained massive losses. As a result, ordinary investors began to rediscover the risk element that is involved in long term asset holding. Investors who were engaged in short term financial trading were in some ways less exposed to the risks that resulted: because they were familiar with the concept of investing for the short term they were able to ride the wave of volatility that gripped the markets \u2013 seeking rewards in both rising and falling markets. Online financial trading makes this possible for millions of ordinary traders because it enables them to place both long and short positions to achieve financial returns regardless of whether the markets rise or fall.<\/p>\n

The Importance Of Community<\/strong><\/p>\n

The financial crisis highlighted the critical importance of information sharing in successful financial trading. Those investors who were in the know succeeded as financial investors, those who were not missed out. The global financial crisis seems to demonstrate that investors who are able to share hints and tips with one another are in a better position to achieve investment success than those who are forced to rely solely on their own talents. Today there is increasing global interest in financial investing communities which enable traders to co-operate across national boundaries and time zones in order to share their knowledge and strategies for the benefit of all. This is one of the key appeals of online financial trading in the post-crisis era and is the reason why financial trading communities like the eToro OpenBook, the world\u2019s largest social trading community<\/a>, are proving to be a huge draw for both new and experienced financial investors.<\/p>\n

The global financial crisis has changed the way in which ordinary people invest forever but it has actually had a positive effect on the online financial trading industry. As people have come to see the advantages of making investment decisions for themselves and of free and open investment methods which let them invest how and when they want to, they have been driven in ever increasing numbers to online financial trading. In today\u2019s financial reality where financial markets are moving around wildly, and long term prospects are unclear, investors want to be in a position where they can get the benefit of such turbulence: rather than risk losing everything on that basis. Online financial trading, particularly community based trading opportunities like the eToro OpenBook, seemingly offers investors just that.<\/p>\n

Forex Article provided by<\/em><\/strong> <\/a>eToro<\/a><\/em><\/strong><\/p>\n

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don\u2019t trade with money you can\u2019t afford to lose.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Jonathan Dayan – It\u2019s no secret that the global financial crisis has had an enormous impact on the way people invest. The shroud of mystery which once hung over the financial markets appears to have lifted for good. In the aftermath of the crisis, millions more people have been investigating alternative investment opportunities like … <\/p>\n

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