Even at the very best of times, the forex market is a volatile entity that is vulnerable to sudden price shifts and wider, social, economic and geopolitical conditions. Given this, it should come as no surprise that a recent slew of unfathomable political events have created even higher levels of volatility, making it extremely hard for traders to achieve even short-term success. From Brexit to the election of Donald Trump in the U.S., 2016 has been a year like no other and one that has dramatically increased the level of risk associated with the foreign exchange.
Coping in the Current Climate: 3 Considerations for Investors
Chinese exporters are the latest demographic to discuss the increasingly volatile nature of the forex market, and were it not for the fact that they had prepared meticulously for significant rate fluctuations in the wake of the U.S. Presidential election they would have found themselves in a considerable bind. This is an important lesson for individual currency traders, who must take proactive steps towards analysing and monitoring the market if they are to survive in the current climate. Here are three key considerations for traders: –
- Keep a Keen Eye on Global Economic Events
One of the key things that Chinese exporters did was to consider the potential impact of a Trump victory. After all, Trump is known to favour a slightly weaker dollar, so his election was always likely to have an impact on major currency pairs and trigger widespread volatility. This was subsequently the case, but by writing in specific clauses that allowed for price adjustments if currency rates moved outside of a specified range, exporters were able to minimise losses.
The key lesson here is monitoring global trends and being prepared for every potential outcome, while also leveraging insight to determine the most likely turn of events. This will ensure that you create a balanced strategy that minimises risk, as you utilise live newsrooms and analytical tools to refine your decisions.
- Embrace Mobile Trading and Drive Real-time Orders
These modern tools are all available through online brokerage firms, so it is important that you place virtual platforms at the heart of your trading strategy. Proactive investors will also look to embrace mobile trading, as this enables them to execute real-time orders that optimise their chance of success in a volatile market (particularly when seeking short-term returns).
With this in mind, you should look to download a viable mobile trading application that offers you instant access to your portfolio and live markets. The Metatrader 4 is perhaps the standard bearer in this market, thanks to its unique combination of diverse analytical tools and ability to drive quick and informed orders.
- Maintain a Keen Sense of Determinism
Determinism is one of the most important attributes for an investor to possess, as this creates an understanding that there are several underlying laws that govern change within the forex market. This helps traders to consider prevailing trends and economic conditions in context, enabling them to make balanced and informed decisions that drive success.
More specifically, it allows investors to analyse economic trends without allowing them to become their master, which in turn minimises the risk of making rash or emotive trades. This a huge boon, and part of a balanced approach that can make the difference between logical and financially lucrative trades.