Four Ways to Use Your Red Envelope Money as a Trader

Lunar New Year is a major historical and cultural festival celebrated by millions of people around the world, particularly the Chinese, Vietnamese, and Korean communities. One of the most notable customs associated with Lunar New Year is the practice of giving and receiving red packet or envelope which contains cash money and are typically given by married adults to children and unmarried juniors, or elderly as an expression of filial piety. The use of red envelope is so deeply rooted in societies that celebrate Lunar New Year to which red envelope is also commonly distributed outside of family occasion during house visits, company or commercial events as a symbol of good luck and blessing, making it the quintessential Lunar New Year gift.

For traders, the red envelopes received as a blessing of the new beginnings could also mean extra money to fund your trades. As a trader, here are 4 ways you may bring the most value out of your red envelope money instead of splurging it away.

Size up their trade position

The red envelope money can be used to increase your holdings for existing trades. This additional capital, if generously gifted, gives traders the financial muscle to potentially capitalise on favourable market conditions. It could be a small boost to your cash reserve, earning you the liberty to size up or average down your positions. Having a larger trade size can help to potentially increase the returns you make for each trade, although this could also mean greater risk for potential losses as well.

Diversification

One good way to consider using your extra red envelope money is to diversify your portfolio by investing in asset classes which have low correlations to one another. Diversification helps to reduce your risk profile and mitigate the adverse impact of a single event on the overall portfolio performance by lowering the risk associated with individual positions. Having said that, it’s important to note that no matter how diversified a portfolio is, the inherent risk of trading can never be entirely eliminated.

There are multiple ways to diversify your portfolio. This includes diversifying across:  

• Different products within the same asset class
• Different industries and sectors in the market
• Different geographies
• Different product types
• Different trade directions

If you have yet to step foot into the trading market, you may open a new trading account with your newly acquired red envelope funds. There are often perks offered for new traders with minimal deposit amount. For example, when traders open an account with Vantage, they are eligible for a 50% deposit bonus promotion and an additional 10% Credit Deposit Bonus for all subsequent deposits. Traders can learn more about the promotion here.

Apart from just additional perks, traders can also access the brokerage’s tools and resources when signing up for the trading account. Some brokerages offer different research tools and educational resources to help traders make better-informed trading decisions. With Vantage, traders can find educational articles from the Academy and even get the latest market news and analysis from experts in the industry.

Improve your trading skills

Money spent on self-improvement is always a wise investment. Your red envelope money could be enough to be used on taking extra trading courses to improve your trading skills. Traders who understand the markets well are better prepared to develop a well-planned trading strategy that aligns with their goals and risk tolerance.

For example, a course on technical analysis could help traders to read charts better and identify potential trading opportunities, while a course on fundamental analysis can teach traders to understand the financial statements of a company to evaluate it better.

Ready to further improve your trading knowledge and bring your skills to the next level? Visit the Vantage Academy now and gain access to our extensive library of articles. You can also read all about latest market news and analysis from the industrial experts to stay informed.

Conclusion

Not all those who celebrate Lunar New Year will receive the same amount of red envelope with the same value of cash money in it. Regardless of how many red envelopes there will be, what matter the most are your blessing and how you would manage your newly found wealth wisely and practically, albeit rather insignificant in value. Be ready to count your blessing and your paper cash in red envelope as we usher in the Year of the Rabbit.