While it is liquidity in the forex market that drives huge, margin-based returns, traders also face huge challenges if they are to ultimately emerge as successful. After all, while it may be possible to earn returns that are far greater than your original investment, there is also a change far more than you can realistically afford to lose.
This is why online brokerage firms such as ETX Capital are so popular in the modern age, as they provide real-time access and a comprehensive suite of tools that enable traders to follow breaking news, analyze trends and execute live transactions. Fundamental knowledge of the market is also crucial, however, especially when it comes to determining the impact of future trends.
Forex market Trends to consider in 2016
With this in mind, we have considered the following trends for 2016 and looked at how they may impact the forex market:
A Potential Recession will create oppression and drive short-term trading
Not only are there multiple trends that point to a volatile forex market in 2016, but the world’s economic leaders have also suggested that the world may well face a recession next year. While this may well see an increase in interest rates, this will instantly create a challenging and risk-averse market where short-term positioning is preferred to long-term investment. This is a key thing to remember, especially if you aim to maximize your profitability over time and make the most of a carefully-tailored portfolio.
Political Volatility will also impact on the Market
On a similar note, it will be exceptionally difficult for investors to cope in the current political climate, where severe terror threats and religious warfare continues to trigger a risk-averse approach among traders. This instantly deters potential investors from making a move, especially in currencies as these options are affected directly by tumult and conflict. While this triggers lower rates of trader activity, it will also help to popularise forex among those with an appetite for risk as traders can hedge their investments against depreciating currencies to make a significant short-term profit.
The Fight to make Forex-fixings Continuous
The impact of the 2014 forex-fixings scandal continues to this day, although regulators and analysts are working hard to counter this negative perception of markers and traders. One of the key measures is to modernize the daily setting and regulation of forex prices so that it suits the contemporary market and external conditions while maintaining an objective overview. This will not only create a fair and just marketplace, but it will also encourage new investors to embrace forex as a viable money-making medium.
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