The The European Union is the largest political and trade bloc in the world. . No, this is not a joke and it is made up of 27 countries with more than 500 million people and a gross domestic product of about $18 billion.
The most prominent member states of the European Union are Germany, France, Italy, Spain and the Netherlands. But in the European sessions we must also calculate United kingdomFrom a financial point of view, the most important country in the bloc.
In this article, we will examine why trading from the EU is more than a good idea.
European trading session
European Union It is a major commercial and investment center. It is home to some of the world’s largest companies such as Volkswagen, Shell, Total Energy, LVMH, and Nestle among others.
The largest exchanges in the bloc are in countries such as Germany, France, Italy, Spain and the United Kingdom (even if they are outside the European Union due to Brexit).
The European trading session usually starts from 9:00 AM to 5:30 PM (GMT + 2). This means that this session usually intersects with both the Asian and American sessions.
and we know How important is it to overlap with other markets It’s time to trade.
Best European Markets to Trade
The EU financial market is well developed and includes some of the largest companies. However, its financial industry is not as advanced as that of the United States.
The main challenge for the block is that it faces 27 countries speak different languages. Therefore, sometimes, it is a little difficult for anyone in Germany to invest in a company in Hungary.
And unlike the United States, because of the language barrier, there no tv A station like CNBC And Bloomberg Focusing on European markets.
In addition, there are all Financial Market Segmentation This makes it difficult for people in one country to invest and trade in another.
And therefore, Indices are some of the best European assets to trade. Some of the most important indicators in Europe are:
- Dax – The DAX 40 index tracks the largest publicly traded companies in Germany such as Mercedes, Volkswagen, Deutsche Bank and Vonovia.
- CAC 40 – This index tracks the largest companies in France such as LVMH, Hermes and Airbus.
- FTSE MIB – This is an index that tracks the largest companies in Italy such as Mediobanca, Moncler and Pirelli.
- caribou – This index tracks the largest companies in Spain such as Iberdrola and Santander.
- Stokes 40 – Stoxx 40 is a leading index that tracks the largest companies in the European market.
Major market movers in the European session
There are several important factors that often move European stocks. First, there is a file interconnected relationship With the American session. In most periods, European stocks usually follow the performance of their American counterparts.
For example, indices like the DAX and CAC 40 often go down when America’s indices and futures like the Dow Jones and S&P 500 go down. Some traders have successfully used this correlation strategy to trade.
Second, we have monetary policy. Actions by the European Central Bank (European Central Bank) have an impact on European stocks. In most cases, they tend to Poor performance when the ECB gets tough vice versa.
At the same time, Actions Taken by the Federal Reserve It usually has an impact on these stocks because most of them have a large presence in the United States.
political and geopolitical
Third, European stocks react to geopolitical issues. The most important issue in the past few years has been the Russian invasion of Ukraine. This invasion resulted in heavy sanctions being imposed on Russia, causing the country to slow shipments of natural gas.
While the European Union is a large continent, it does not have significant natural resources.
Fourth, the European Union Stores mostly Respond to activities between member states such as politics. For example, Mario Draghi’s resignation as Italian Prime Minister had a negative impact on the bloc.
Trading US stocks in the European Union
There is a common question among EU members about how to trade US stocks. Besides, these are Some of the most famous and liquid stocks In the world. Among the most famous of these companies are companies such as Apple, Microsoft, Meta Platforms, and Nvidia.
Related “ How to find the most active stocks
Most people in Europe can invest in US stocks. First, you can Use of world famous brokers to reach the US market. Some of the most famous global brokers that offer US stocks are Schauband Interactive Brokers and devotion.
Second, you can use files Forex and CFD Brokers Which provides stocks from all over the world. Examples of such brokers are companies such as ATFX, OctaFx and IG. These brokers give you access to CFDs on stocks, which are derivatives that track US stocks.
Third, you can use a file A company like Day Trade the World (DTTW™) gives you access to US and European stocks.
European stock trading in the US
It is much easier to trade European stocks in the US. First, you can trade European companies listed in the United States Like Nestlé and Saab. You can buy them just by buying US stocks.
Second, you can invest in ETFs that track EU stocks. Finally, you can use a company like DTTW™ that gives you direct market access to European stocks.
Trade from Europe: the main pluses
In the past few years, the number of US investors and traders relocating to Europe has been on an upward trend. There are several reasons why this makes sense.
These reasons also apply to those who Want to start trading in Europe. There’s no need to really get close to Wall Street. You can start your business in any country.
All markets are available
With online trading, you can access all the markets (and stocks) available from anywhere in the world. Traders in Europe have the same access to stocks as their American counterparts as mentioned above.
the only Determine he is in stockBecause you can only trade it for a limited period of time. but by Take advantage of overlaps, especially the US session, you can extend your trading day. This is also a good option for those who want to start trading part time.
Less office expenses
Second, they can Save a lot of money since the cost of living In some European cities less than in famous American cities such as Los Angeles and New York.
For example, the average rent in Europe is about 885 euros, which is equivalent to 881 dollars. In the United States, the average rent is over $1,300.
In general, even the installation of the Internet and Contracts with Internet Service Providers (ISPs) are cheaper in European countries than in the United States.
Third, healthcare in the majority of European cities is often much cheaper than in the United States. Moreover, some members of the European Union rank higher in terms of happiness than the United States.
Let’s take importance Statistics from the Peterson Foundation website. In 2021, the United States spent an estimated $12,318 per person on health care – the highest per capita health care costs of any OECD country.
The average for wealthy OECD countries, excluding the United States, was just $5,829 per capita. Such comparisons suggest that the United States spends a disproportionate amount on health care.
Trade challenges in Europe
On the other hand, there is some challenges faced by investors and traders in Europe. for one, Europe is a hotbed of regulations (But there is no PDT rule). Recently, the bloc passed MIFID II regulations that increased regulations on businesses and individuals.
additional, Europe imposes big taxes on individuals compared to the United States. These always higher taxes (with the exception of Switzerland) lead to lower wages in the countries of Europe.
but, This is not a big problem for day tradersespecially those who rely on a business owned business for their market activities.
why? There is no limit to the profits (but also losses) that a trader can make, so the income depends only on one’s skill (or office performance). still, DTTW™ partners can make up for this By getting higher returns.
Another challenge is the language because European countries use different languages.
The European Union is one of the largest trading blocs in the world. For anyone who wants to start trading, Europe is probably the best place. Despite the allure that the United States may hold.
As we have seen, the trading opportunities are the same as in the US, if not greater thanks to the intersection of the two sessions.
Useful external resources
- The landscape of European stock trading and liquidity – Oxera.com