Trades to Love This Valentine’s Day

As Valentine’s Day approaches, it’s time to login to MetaTrader 4/5 (MT4/MT5) and reassess your portfolio to capitalise on the week-long celebration of love. From Rose Day to Teddy Day and Chocolate Day to Valentine’s Day, the sales of giftables grow significantly, which has a direct impact on the financial markets. Here are some opportunities you can take advantage of during this time.

The Romance Rally

The uptick that global indices and precious metals demonstrate in the week leading up to Valentine’s Day has “lovingly” been named the “Romance Rally.” The day brings optimism and confidence to the markets. In 2023, the S&P 500 had risen 7.7% year-to-date on February 14.

But did you know that 90% of the time that S&P 500 has risen over 7.5% till mid-February, the year has turned out to be one of growth for the benchmark index? Therefore, consumer sentiment at the beginning of the year is often an indicator of their spending habits for the rest of year. Additionally, V-Day not being a trading holiday presents continued opportunities that can be taken advantage of throughout trading hours. 

The Retail Sector

Consumer spending on Valentine’s Day totalled $25.9 billion in 2023, which was 8.37% higher than the spend in 2022, when inflation across the world was at multi-year highs. Consumers may spend even more in 2024 to make their partners feel special, sending stock indices higher. So, login to MT5 and look out for these most popular trades for the Day of love:

A Little (Extra) Give and Take

Valentine’s Day décor and gifts recorded the highest searches on Amazon at 2.2 million and 1.7 million, respectively, in 2023. Valentine’s Day searches begin in January and continue right up to February 14. With 35% of customers shopping online, the ecommerce sector experiences a significant surge in revenue at this time. Ecommerce titans Alibaba and JD.com could get bulls blowing kisses at the Hang Seng, while Reliance could have the same effect on the S&P BSE Sensex around Valentine’s Day.

Sweet Indulgence

A survey in 2022 showed that 93% of the people planning to celebrate Valentine’s Day expected to receive chocolates as gifts in the UK. The chocolate industry considers V-Day the third-biggest day for sales. Candy and chocolates remain the most gifted items for this occasion. So much so that international chocolate brand Hershey planned its entire campaign in 2023 around Valentine’s Day, making it all about love to boost its sales across India. While brands like Nestle India may provide a fillip to the Sensex, Associated British Foods could have the same effect on the FTSE 100.

Some Time Away

The hospitality industry reaps the benefits of this day as lovers look for places to escape to from their busy schedules. Thomas Cook (India) Limited reported a 35% surge in demand for travel with Valentine’s Day approaching in 2023.

Restaurants and hotels see increased demand during Valentine’s week. With the remote work culture having firmly established itself, the demand for staycations has significantly risen. Mastercard highlighted just this during the 2023 Valentine’s season. Consumer spending on restaurants grew 14% and airline tickets 16% yoy, while lodging expenses spiked by a whopping 43%. 

Loving Yourself First

Looking and feeling great on Valentine’s Day has also come into the spotlight. Around 22% respondents in a UK-based Yodel survey said they planned to buy perfumes and aftershaves, while 21% would spend on clothes. Such trends may drive sales of Marks & Spenser, Next, and Burberry, lending upside to the FTSE 100. So, be prepared with your leverage calculator on MT5.   

Precious Metals

Diamonds might be a girl’s best friend, but women won’t say no to jewellery in any form, especially on the day of love. Little wonder then that gold and silver prices rise in the days leading up to Valentine’s Day. Gen Z and Millennials consider delicate jewellery a part of their daily lives, not something kept only for special occasions. Consumer demand during the first two weeks of February pushed jewellery sales 15% higher in 2021, compared to the previous year.

Seize the Opportunity

A great way to take advantage of this wide range of stocks spread across multiple sectors is to invest in indices. Index trading gives you exposure to the best stocks among from diverse industries, without you having to conduct arduous fundamental analysis of each company in the retail sector. And if you want to increase the available opportunities, consider index trading with Contract For Differences (CFDs) online, which lets you speculate on both rising and falling prices.

Although trading precious metals, in bullion using a silver or gold technical analysis tools, allows direct exposure to the asset, it requires much more capital than trading CFDs. CFDs are derivative instruments that offer margin trading, allowing you to maximise market exposure even on a limited budget. The best way to estimate your potential is to use a leverage calculator. But remember that when you increase your exposure with leverage, both potential profits and potential losses will get magnified. So, choose the leverage limit wisely.

Also, experienced traders recommend that stringent risk mitigation measures, such as stop loss and take profit, remain an essential part of every trading strategy. Beginners can use a stop loss calculator to determine the exit levels to set.

To Sum Up

• Valentine’s Day tends to boost consumer spending in various sectors.
• Demand for chocolates, flowers, hospitality, and jewellery grows.
• Ecommerce and in-store sales of gift items increase significantly.
• Index trading allows traders to gain exposure to a wide selection of equities in a single trade.
• CFD trading allows traders to take advantage of opportunities in both rising and falling markets.
• Practicing risk management is critical for trading leveraged instruments such as CFDs.

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