FOREX Trading Blog Post

COVID-19: Use Your Time at Home to Learn This Trillion-Dollar Market — Forex

The coronavirus pandemic has destroyed many things, from the way people function, lives, livelihoods, companies, industries as a whole, and even economies. The long-lasting consequences remain to be seen, and economists say how 2021 will not be much better than 2020 or could be even worse. But wait, it does get better! Despite some bold predictions from economists and financial experts, some economic sectors are exploding, such as the foreign exchange market (Forex). Amid the pandemic, the Forex market trading volume has surged by 300 percent!But before we explain why Forex is increasing even during the pandemic, let’s understand what Forex is. 1) Forex Trading Has Been Around For A While We know what you are thinking, “If the Forex market is so prominent, why have I not heard of it before now?” The answer? You likely have. Foreign exchange is precisely what it sounds like; it trades in different currencies and invests in them as they rise in value. The reality is Forex’s concept, and its practice of different trading currencies has been around for centuries. The earliest documented cases of exchanging foreign currencies can be seen in the Bible, where money changers would do business in city markets and on the steps of temples. Ever since that time, it’s been a widely accepted practice to formalize different currencies. As the world’s economy continues to boom, and most countries’ production of exports also grows, the market has also expanded into something impressive. 2) The Market is Worth Over $6 Trillion USD We said that the Forex market was huge, but just how large? $6.6 trillion. Yes, it is exploding as advertised.  According to the Bank for International Settlements (BIS), in 2019, the Forex market has consistently risen for several years, even during Covid. Who is the Bank for International Settlements? The BIS is the largest central bank worldwide. We say “basically” because it is not one physical bank, but rather it is collectively owned by 60 central banks around the world that makeup just about all of the world’s GDP.  The BIS reports that this is a daily turnover; daily turnover boils down to a daily exchange of money worth $6.6 trillion. Another way to put this into perspective is that the Forex market easily beats the equity, futures, bonds, cryptocurrency markets, and the New York Stock Exchange combined. 3) You Don’t Have To Wait; You Can Join Forex Whenever You Want All this said, you probably think that a market so big would probably already be saturated or that you need to be a big business mogul to understand the ins and outs of a centuries-old industry. And in the past, you would’ve been right. Back in the day, only banks or people with liquid funds in the millions of dollars could participate in the Forex market. However, now with different Forex brokers providing retail investors access to the largest and most liquid financial market, anyone can start jumping in and experiencing the unique, profitable world of Forex trading! But Why Is Forex Managing To Boom Even During A Pandemic? To put it simply, the most potent portion is unemployment. Unemployment has been essentially on a consistent rise since spring 2020. The surging employment losses are a direct result of the pandemic’s ever-growing impact; if you look at it from an economic perspective, it is even worse than the 2008 recession. Covid has had an outrageous impact on big and small businesses around the world. Many corporations, not just “Mom & Pop” shops, are shutting down or having to release chunks of their staff. Some large corporations are closing their subsidiaries all over Asia, especially in China, and now they are facing critical hurdles. The shutdowns have led to the deceleration of GDP. So what were people left to do? Many countries turned to Forex, particularly the almighty dollar. Heightened interest in the dollar rocketed due to its standing as the global reserve currency. Its rock-solid strength also affected the currency exchange market, which deepened the connection with the rising stock market. Now that we know what Forex is and why it is successful even when so many things are down let’s dive into some tips and tricks for Forex novices.

1. Study the Markets

We cannot emphasize it enough; you need to study and educate yourself on the Forex market. Analyze currency pairs and what factors or other influences affect them before putting up your own money; before you invest in Forex, you need to invest in the time to study. This time investment can save you money.

2. Make a Plan and Hold to It

Crafting a blueprint for your investment is a crucial element of successful trading. Your blueprint should incorporate your earnings goals, tolerance of risk, sound investing methodology, and evaluation criteria. Once you have your ducks in a row and a solid plan in place, every trade you make needs to be within your plan’s parameters. Something to consider: it is quite common to be most clearheaded prior to placing a trade and most anxious after you place a trade.

3. Practice

Did you know you can put your trading strategy to the test in live market conditions with a risk-free FOREX.com practice account?? How awesome is that! This means you get a RISK-FREE opportunity to see what it’s like to exchange currency pairs while taking your trading strategy for a test drive without jeopardizing any of your own money.

4. Know When to Stop

We know it is easier said than done but seriously: know your limits. This concept applies to everything, such as learning how much risk you are willing to put on each trade, adjusting your leverage ratio to match your needs, and never risking more than you can afford to lose. This applies to any investment you make, honestly.

5. Know Where to Stop Along the Way

Unless you are a professional trader, you likely don’t have time to watch the markets all day, every day. You can better manage your risk and protect potential profits by stopping and limiting orders, which simply means getting you out of the market at the price you set. Setting up trailing stops is beneficial; a “trailing stop” is when you trail your position at a specific distance as the market moves, helping to protect profits should the market reverse (think of it like a save point in a video game). One thing to remember is that placing contingent orders may not necessarily limit your risk for losses.

6. Leave Your Emotions at the Door

Listen up; the market will fluctuate, that is Trading 101. You need to remember not to panic when the market is not going your way. Don’t just suddenly try to make a few extra trades to make up for something. When it comes to trading, be all disco, no panic. “Revenge trading” never ends well. Don’t let a negative emotion throw a wrench in your plans for successful trading. When you have a losing trade, don’t throw everything away and go all-in to try to make it back in one shot; it’s smarter to stick with your plan and make up the lost money a little at a time than to find yourself with two devastating losses.Forex can be a real asset if you use it correctly. Be sure to do your research and talk to a professional before jumping in.