For many of us who are not able to work during the lockdown, making enough money to stay afloat has suddenly become a considerable challenge. If you are kicking your heels and looking for a new skill to learn that will help to make ends meet, why not try your hand on the FXTM Forex trading platform? South Africa’s premier broker has some great tutorials that can take you from beginner to expert in no time.
The forex (FX) market is a global, over-the-counter market where you can speculate on the price of foreign currency. It may surprise you but there is a lot of money to be made from trading currency. And this has never been truer than it is now. As any good trader knows, market volatility spells opportunity. But where there is risk, there is also reward. If you plan on getting into forex trading, here are some tips on how to trade forex in the pandemic.
1. Monitor the National News
So far, we have seen a close correlation between the numbers and severity of a country’s coronavirus outbreak and the volatility of its currency. Countries which have seemingly not been too adversely affected as of yet have seen their currencies remain more or less stable. This could all change if the infection rate rises, causing sharp drops in its currency price. Similarly, countries which have seemingly flattened the curve and look to be on the road to economic recovery could see sharp rises in their currency prices. Keep an eye on the national news of countries around the world to stay abreast of the latest developments. This will help you to predict which currency will become the next bull or bear market and get in and out in time to make a profit.
2. Avoid Emotional Decision-Making
At times of crisis, our levels of anxiety go through the roof. From panic-buying toilet paper to the wild conspiracy theories doing the rounds, we can see evidence of irrational behavior which is driven by fear almost everywhere we look. The forex markets are no exception to this trend. Currencies which normally represent relatively stable investments can suddenly drop off a cliff as traders panic-sell their positions off the back of the subtlest changes in economic indicators. At times like these, you should formulate a set of principles and stick to them doggedly. As all the best traders will tell you, the real money is made by swimming against the current and thinking for yourself.
3. Invest in the Dollar
Many experts today are suggesting that the only safe currency is the dollar. Whether or not you agree with this, it is true to say that the US is the world’s biggest economy and is the one which is most likely to recover from the crisis more rapidly than other countries. With this in mind, there may be value in trading the Euro/Dollar since this makes up around 43% of the dollar index. Other markets such as the GBP/Dollar and the MexPeso/Dollar may present some equally profitable opportunities.
4. Consider Buying Crypto
Although it is not strictly considered forex, crypto offers a real alternative. Since it is not subject to any financial institution that can decide to pump new currency into an ailing economy to try to stimulate recovery, crypto is a great hedge against the devaluation of currencies. With the proceeds from Bitcoin mining recently having halved in accordance, the cryptocurrency could be set for another jump over the next year if past patterns are to be believed. Now could be a great time to diversify your portfolio by buying into Bitcoin or other altcoins.
The economic uncertainty brought on by the pandemic has brought both risks and opportunity for forex trading. At a time where national currency prices are subject to large swings, it is especially important that you are aware of market trends. This article has aimed to give you the inside track so that you will be turning a profit from forex in next to no time. However, it goes without saying that you should do your own research before you commit to a trade. Make sure you only trade what you can afford to lose and good luck!