You’ve undoubtedly heard it all before: Forex trading is dangerous, the Forex market is too volatile, you’ll lose your entire investment in the long run, and so on.
Yes, trading the Forex market is a hazardous business, but it can also be an investment that can help you save money during a downturn. What exactly do we mean when we say that? Here are the top four reasons why we believe Forex trading is the best way to make money amid economic downturns.
You Earn Money In a Bear Market
The stock market is well-known to the majority of people. A company’s value rises when it performs successfully. If you own stock in that particular company, you profit as the price per share rises. In a bull market, this is known as taking profit. Downtrends or bear markets, on the other hand, are a little different. You won’t be able to make money in equities during bear markets. You should exit your trade once the market is poised to make a downward reversal so you don’t lose money.
When compared to stock trading, forex trading is a completely different animal. You trade a currency pair when you trade Forex. This implies that you expect one economy to outperform the other. You will make money if your expectation is correct.
For example, after obtaining safe haven status, the USD has been gradually declining in recent days. Many people have been shorting or selling the dollar as a result of this. The JPY, on the other hand, has been relatively stable, making the USD/JPY a nice trading opportunity. Because the US is negative and Japan is rather stable, traders will be shorting USD/JPY in this situation.
It Cannot Be Brought Down By Disasters
One of the most tempting aspects of the Forex Market is that it is immune to natural disasters. The Coronavirus pandemic, which is currently occurring, is one of the best instances.
Many people have lost money in the stock market as a result of the Coronavirus’s spread, many businesses have had to close owing to international lockdowns, and many staff have had to be laid off since their employers could no longer operate. Regardless of this, the Forex Market is still very much alive and well. It’s actually traveling faster than usual.
As a result, even if stocks, businesses, and employment all cease to exist, you may still profit in the Forex Market if you know how.
Movements Are More Volatile
The Forex market is already quite turbulent on a regular basis. What happens if there are pandemics or natural disasters? Granted, this type of volatility movement entails a higher level of risk on your part.
However, with the appropriate Forex edge and risk management, you can ride really large waves and make a lot of money in a short amount of time.
There Is Always Opportunity To Be Found
It’s worth noting that certain currencies and commodities are still performing well despite the global economic downturn. This is because investors and traders require a secure and stable environment in which to store their funds during difficult times. Gold has always been regarded as a safe haven asset. This explains why it has been rallying over the last few days.
So, even if the global economic outlook is grim, there are still some possibilities to be found if you search the Forex market. You may deposit your money in secure commodities like gold and silver while the pandemic continues.
Some economies, on the other hand, are more stable than others. Even if a country’s economy declines, it will not do so at the same rate as other countries’ economies. You will profit if you invest in a stable economy and compare it to a rapidly declining economy.
That’s Why…
Those four factors alone should convince you that the Forex market is one of the safest investment options available during times of economic uncertainty.
However, this isn’t to mean that you’ll always make money in the Forex market. First and foremost, you must learn how to read the market. The next step is to devise a strategy that will offer you an advantage. Last but not least, you must master risk management in order to keep your account from biting off more than it can chew.
All of those things will be taught to you at Learn to Trade. Our professional coaches are committed to assisting you in preparing for economic downturns by equipping you with the ability to spot potential chances.
Why is forex recession-resistant?
We have no idea when the next economic downturn will occur. All we know is that we’re overdue for one, and we want to be prepared.
Let’s not forget that being in the right place at the right time has a lot of advantages.
The wealthy did what they normally do: they took full advantage of the situation and purchased everything on the cheap.
Make Your Income Recession-Proof
My personal advice is to do everything you can to make money in spot Forex trading, whether from your own account, someone else’s account, or a trading firm’s account. GET OVER THERE.
We exchange one currency against another, and we can trade in either direction.
Our world continues to spin even if the stock market crashes.
A recession is beneficial to us because it restores actual volume and liquidity to our market.
I’ve been trading as a trend trader with about a third of the liquidity I had when I first started.
If I’m doing well now, I’m salivating at the prospect of people reinvesting their money in currencies.
We aren’t powerless in the sense of “I’m fine as long as it’s fine.”
We’re safe in this place.
What You Really Need To Protect Yourself
As a Forex trader, you have access to all eight main currencies at all times, correct? So, you’re safe, right?
You might have access to all eight, if not more.
However, you will only be paid in one currency.
You’ll get whatever currency you set up your account to pay you in, or whatever currency your company pays out in.
And if that currency is worthless, especially in light of the recession, you aren’t going to win.
You can now do this by going to any currency exchange and completing the transaction.
You’ll have to pay some costs.
I had no choice.
I may look into a couple Currency Exchange Apps in the future to try to avoid fees the next time I travel abroad, but I haven’t done so yet.
In the podcast, I talked about which currencies I own.
I have my justifications.
I don’t want to share.
Please conduct your own research in this area.
Then, over 8 months after writing this blog post, I released this video if you want to delve even deeper into this topic.
It has also had its currency list updated.
Is it possible for forex to crash?
The quick answer to this question is Yes and No. While Forex markets as a whole cannot fail, individual currencies can crash at any time. Forex market collapses differ from stock market crashes in that they usually affect a single currency. When the Swiss Central Bank decoupled the Swiss franc from the euro, for example, the franc rose and dragged other currencies down in a so-called flash crash. In early 2019, a similar scenario occurred when the Japanese yen fell overnight in another flash crash, bringing many other currencies down with it.
Is it possible to become wealthy by trading forex?
Is it possible to become wealthy through FX trading? Although our first response to that question would be a resounding “No,” we need modify it. If you’re a hedge fund with huge pockets or a very good currency trader, forex trading could make you wealthy. However, rather than being an easy road to riches, forex trading may be a rocky road to massive losses and potential penury for the average retail trader.
How long should a failing FX deal be kept open?
Some brokers may impose restrictions, but respectable Forex brokers will not. You could theoretically keep your deal open indefinitely as long as there is a market.
Especially for most FX traders who are looking to profit from variations in the value of various currencies.
You can’t “cash in” until you close a deal, so you’ll have to do that at some time if you want to make money.
What would happen if the Forex market went down in flames?
A single currency can be affected by a Forex market meltdown, but not the entire market. A currency crash can occur as a result of a variety of small and large events that cause the currency to decline in value. Investors will sell that currency due to market triggers. In most forex exchanges, two currencies are exchanged in one transaction.
Is forex trading a risky business?
Here’s why Forex trading isn’t a game of chance. A trader can turn the odds in their favor and stay ahead of the market and other traders by employing numerous techniques and tools.
Should you invest in stocks or forex?
The risk tolerance and trading style of the trader or investor may be the most crucial factors. Buy-and-hold investors, for example, may choose the stock market, but short-term traders, such as swing, day, and scalp traders, may prefer forex because of its higher price volatility.
What are the daily earnings of FX traders?
Many Forex traders can profit from $1000 to $5000 in a single trading day. Forex traders, in essence, trade the exchange of one currency for another.
When should you avoid FX trading?
Each new trading week begins with a somewhat quiet first 24 hours. After a 48-hour absence, market participants are only going back online.
It’s also the time when the markets are deciding which way to go for the coming week.
With this in mind, I like to sit out Mondaysunless I already have a position built from previous weeks, of course.
Lower liquidity is common in the final 24 hours of the trading week. Technical analysis, as you may know, performs better in highly liquid markets. One of the reasons I converted from stocks to Forex in 2007 was because of this.
Furthermore, I prefer not to take on additional risks before the weekend. At the start of the week, the Forex market can gap very violently, and I don’t want to get caught on the wrong side of a Monday gap.
Friday, in my opinion, is the worst offender of the two days. I’m not keen on the thought of starting a new job in front of a 48-hour window when I’m powerless to do anything but watch.
So there you have it, the two worst days to trade are Mondays and Fridays, with the latter being significantly worse.
You can see from the process of elimination that I prefer to fill new posts between Tuesday and Thursday. The best setups, in my experience, happen during these three days.
Market participants have settled in for the week at this point. It’s also far enough away from the weekend to allow you to cut your losses if the market takes a turn for the worse.
On Mondays, I will occasionally trade, but only if the setting is perfect. It has to be so excellent that I’d have to be insane not to take it.
In my opinion, Fridays are off limits. You’d be better off reassessing the situation on Monday. You won’t have to worry about the market gapping against your position at the start of the week if you do it this way.
George Soros
We begin our ranking of the finest Forex traders in the world with George Soros, one of the most iconic individuals in the history of Forex trading. Soros is sure to come up in any discussion on who is the greatest Forex trader of all time.
Soros is considered as one of history’s greatest investors, known for identifying market inefficiencies and exploiting them with massive, highly leveraged trades utilizing his excellent understanding of economic trends. He cemented his fame in 1992, when he allegedly made more than $1 billion by short selling the British pound (GBP), giving him the moniker “The King of Short Selling.” “In the process, he became known as “the man who broke the Bank of England.”
Prior to Soros’ windfall, the UK was a member of the European Exchange Rate Mechanism (ERM), which basically guaranteed that the government would adopt policies that kept the pound’s value within a particular range in relation to other European currencies.
The UK’s inflation rate was high at the time, and interest rates were above 13%, prompting Soros and other successful Forex traders to assume that the ERM was artificially maintaining the UK’s currency high.
The UK eventually left the ERM and allowed their currency to float again, causing the pound to plummet, resulting in what is now known as Black Wednesday. By this time, Soros had amassed a massive short position against the pound, worth more than $10 billion, in what will undoubtedly go down in history as one of the biggest Forex bets ever, cementing Soros’ name as one of the best Forex traders on the planet.
As George Soros once said: “I’m only wealthy because I recognize when I’m mistaken.” This phrase encapsulates one of the most fundamental aspects of becoming a successful Forex trader: the ability to admit when you’re wrong.
Being able to confess when they are incorrect and move quickly to correct the mistake is a critical ability for a successful Forex trader, and it helps successful traders minimize their losses in the long run.
George Soros has risen to the top of the list as one of the greatest Forex traders to follow, and with an estimated net worth of $8.6 billion, he is undoubtedly one of the world’s wealthiest Forex traders.
Stanley Druckenmiller
This accomplished Forex trader is related to the last entrant on our list of the top Forex traders. For nearly ten years, Stanley Druckenmiller worked for George Soros’ Quantum Fund and considers him a mentor.
Since then, Druckenmiller has built a solid reputation for himself, successfully managing billions of dollars for the firm he created, Duquesne Capital. Without a question, he has established himself as one of the world’s top Forex traders.
In addition to helping Soros achieve fame on Black Wednesday, Druckenmiller built a track record of spectacular profits with Duquesne in the years preceding up to his retirement, and currently has a net worth of over $3 billion.
According to Druckenmiller, his effective trading method for generating long-term returns is based on capital preservation. When his trades are performing well, he aggressively seeks profits, and when they aren’t, he promptly cuts losses.
When you’re right, you should maximize your possibilities, and when you’re wrong, you should minimize your harm. That’s Druckenmiller’s philosophy. “There are a lot of shoes on the shelf; wear only the ones that fit,” Druckenmiller said in an interview for the bestselling book “The New Market Wizards.”
Bill Lipschutz
Bill Lipschutz is something of a legend in the Forex trading industry, known for his inspirational trading adventure that began while he was still in university in the 1970s.
Lipschutz got $12,000 after his grandmother died while he was still in school. Lipschutz began trading with this money and, astonishingly, transformed this small sum into $250,000.
That would have been enough for many individuals to give up trading for good, but not for Lipschutz, one of the top Forex traders in the world. After graduating, he continued trading and joined Salomon Brothers as part of a training program. Soon after, he was asked to join their Foreign Exchange Department, and by 1985, he was bringing in $300 million a year for the company.
Heathersage Capital Management, which specializes in trading G10 currencies, was created by him in 1995. Lipschutz characterizes Forex as a very psychological market, and he believes, like many other successful Forex traders, that market perceptions influence price behavior just as much as fundamentals.
Lipschutz also agrees with Stanley Druckenmiller’s point of view that being a successful Forex trader requires capitalizing on the times when you are correct. “You have to figure out how to make money by being right only 20 to 30 percent of the time,” he famously said about trading.
Lipschutz’s narrative of perseverance and ability to rebound from a painful loss early in his career to become a successful trader has earned him a spot on our list of the top Forex traders in the world.