There has been a change in the way Singaporean retail traders discuss their portfolios over the last couple of years. The discussion used to focus on one market, typically forex or local equities, and traders became very familiar with a single market before moving on to the next. That paradigm has given way to a wider one. Traders no longer consider it a luxury to think across asset classes in the same session, switching between indices, commodities, currencies and individual stocks and the infrastructure to achieve that efficiently has never been so available.
The appeal is in part practical. Holding positions across more than one asset class without a unified platform means having to maintain multiple accounts with different brokers, different margin requirements and different reporting structures. A trader in Singapore that desires to have exposure to gold, a S&P 500 position and short a local currency pair can do all three in a single interface and view them in a single dashboard. That consolidation matters because of time constraints and the necessity to devote attention to the trades themselves rather than the logistics surrounding them.
The risk profile of a trading portfolio also improves with diversification across various instruments in a manner not achievable with a single-asset approach. When one position moves against a trader, another might be moving in their favor giving a natural buffer to decrease the emotional and financial effects of a single loss. The seasoned players have been trained to think of their open positions as a system and not as a collection of individual bets but as a system of interconnected, complementary parts.
Macro-based trading has been found to be especially suitable for CFD trading across asset classes. A trader who has an opinion about global risk sentiment can therefore express it using a mixture of instruments: a short in an emerging market currency, a long in a safe-haven commodity, and a position in a volatility-linked index. Each leg supports the thesis from a different angle and the position taken by the combination of legs can be more precise than would be possible with any one instrument. This type of overlay thinking used to be the preserve of the hedge funds. Retail platforms have enabled those with the analytical framework to make use of it adequately.
Singapore traders have particularly focused their attention on commodity markets since the city is a leading trading center when it comes to oil, metals, and agricultural products. Occasionally, professionals in commodity-proximate businesses will hedge directly related to their business using leverage instruments, but the boundary between hedging and speculation is one that serious players ought to carefully consider. The information and context available to a shipping executive with a strong opinion about the direction of oil prices are something most retail traders simply lack.
The range of instruments offered has also enabled traders to remain active in the various market hours. When the Asian markets are silent, the European indices give motion. As European markets close, the US markets take over. The multi-asset approach implies that there is hardly a single day when there is nothing to keep an eye on, which suits the 24/7 attention that many professionals in Singapore are already giving to their primary occupation.
The current popularity of multi-asset CFD trading in Singapore can simply be considered a mirror of the development of the retail participant. The traders are no longer content with a single lens in the market. They desire variety, flexibility and the capacity to pursue ideas wherever they arise, and the platforms that cater to this market have constructed their product in precisely that manner.
