How “Forex Trading from Home” became the biggest winner of the Covid-19 Crisis

With the emergence and swift spread of Covid-19 across the globe along with the significant amount of countries that have been affected by this pandemic, a lot of governing bodies started imposing lockdowns in an attempt to curb the spread of the virus.

This resulted in the doors of thousands, if not more, businesses having to temporarily close their doors and attempt at remote operations, where possible.

Source: Forextrading.co.za

Millions of people have been forced to work remotely from their homes while others who work in industries that had to shut down and who cannot operate from home, were left in a stasis of social solitary confinement.

Numerous people have been left seeking other means of income during this time and this saw an influx of traders who entered the market with the objective of additional income in mind.

Accessibility and Flexibility

For existing traders, being quarantined to their homes means that they have more time that they can dedicate to their trading activities. The Forex Market is open 24/7 but this does not mean that traders normally have as much time in which they can trade.

Traders who depend on short term trading methods now have more time in which they can develop and adapt different trading strategies whether their strategies are adapted to accommodate the currently volatile Forex Market, or they keep to existing strategies.

Traders also have more time in which they can test their trading strategies more thoroughly in addition to conducting comprehensive technical and fundamental analysis.

More time can be spent on conducting these analysis more thoroughly especially with some instability existing in the Forex Market along with uncertainty as to how the virus will further affect economies, currencies, and the exchange rate.

Traders can therefore dedicate more time and effort into compensating for sudden, volatile changes and formulate trading strategies that can combat this and in turn compensate for unfavourable conditions and minimize the chances and risks of incurring losses.

Financial instability and uncertainty

There are various factors that impact current socio-economic circumstances and situations with people facing uncertainty not only in their income, but also having to face whether their source of income is reliable and whether they will still be employed post-Covid-19.

A lot of people have turned to trading as a means to obtain a different source of income, or an alternative source, despite the risks involved with trading financial instruments such as Forex in a volatile market.

There is a great chance of profits while facing the risk of incurring losses that exceed the trader’s initial deposit. New traders are advised to conduct thorough research before entering the trading environment to avoid substantial losses.

An influx of short term trading

With a lot more time on their hands, traders who are not yet utilizing short term trading strategies such as day trading and trend following may have opted for these strategies instead of keeping to strategies dedicated to longer term trading.

When using day trading strategies, traders enter in positions during the trading day and they exit in the same day. This is a risky strategy because of the volatility that the Forex market can have at any given time.

With economic situations as they are resulting in an even more volatile market, the potential for gain and the risk of incurring losses are nearly equal.

It is not advisable for traders who are not familiar with short term trading strategies to immediately implement them if the traders have not conducted enough research, familiarized themselves with the strategy or tested the strategy thoroughly.

Some of the most common day trading strategies that are currently being used by traders include, but is not limited to:

  • Breakout – this strategy is centred around a certain level at which the price clears on the trader’s chart, with increased volume.
  • Scalping – which is one of the most popular strategies used that looks at capitalising on minute price changes and the trader will look at selling as soon as the trade reaches profitability.
  • Momentum – which is more popular amongst beginners and revolves around acting on news sources in allowing the trader to identify any substantial trend movements with the added support of high volumes.
  • Reversal – traders who use this trade against the apparent trend and requires that the trader be able to accurately identify possible pullbacks along with predicting their strengths say Erik Marais – Professional Trader at Makaroisfx.com

How traders can trade safely during this pandemic

Existing traders are advised to keep trading according to their trading plan and strategies should they already compensate for volatile conditions, and to keep clear of chaotic trading that may also result in substantial losses.

Traders are also advised not to invest in currencies of countries that have been heavily affected by the spread of Covid-19 and to sell any currencies of such countries.

Going long on safe haven currencies such as JPY and CHF is advisable as long as these currencies are not affected too greatly by the pandemic, in which case traders are advised to go short should the trader notice a change in the current situations of the countries.

It is imperative for traders to stay up to date on news as well as gossip to monitor the pandemic situation so that they can determine how it will affect their trading along with their profits and losses.

Here is a list of the best forex brokers you can use to get started

By using the information obtained from news and other sources, traders can then apply that knowledge to their analysis to formulate more accurate strategies in entering and exiting trades.

 

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