While almost the entire world is currently in self-isolation, people are becoming increasingly interested in making money in Forex. The world has faced a huge unexpected challenge due to the coronavirus pandemic, bringing business activities to a nearly complete halt and resulting in global economic crisis.
In light of the lockdown, many people have lost their jobs and business or temporarily have no source of income which forces them to look for other ways to earn online. Even though earning money on the Internet has been an available option for many years, today it has become probably the only way to stay afloat during the global quarantine.
However, every cloud has a silver lining. Perhaps, you are the kind of person who never got to master the art of a remote job, blaming it on the lack of time, busy schedule, etc. Right now, you have enough time on your hands and strong motivation to do that in order to survive.
This is an excellent opportunity to learn how to trade Forex, make money in financial markets and get a new source of income?
The quarantine that is currently happening almost everywhere in the world brought many economic sectors to a standstill. People lost their jobs. Businesses are suffering great losses. People have got no money. Even when quarantine is over, it is going to take long for these sectors to fully recover.
One of the reasons is poor consumer solvency after the crisis. To put it simply, the majority of the economic sectors won’t have much money in the immediate future.
However, there are sectors that are not afraid of the crisis. These are financial markets, including Forex. Forex is an international exchange market where the currencies of different countries are exchanged, bought and sold.
Its daily turnover reaches up to 7 trillion dollars. What’s more, there will always be money in this particular market, regardless of whether the global economy is growing or not. Essentially, this means that anyone who knows how to do it right can make money in Forex.
Those who are not familiar with financial markets might wonder, "But how do I make money in Forex when the whole world is dealing with the crisis?"
When it comes to a regular business, you can buy a cheap product, wait for it to go up in value, and sell it at a higher price, thus making money on it. However, if the price drops, you’ll incur losses.
The biggest advantage of the Forex market is that you can make a profit even when the prices go down.
This is possible only in financial markets where potential profit can increase exponentially even in the times of crisis. This is one of the good reasons why you should give Forex a shot if you want to work remotely. You will always be able to earn money there no matter what is happening in the world.
But how do you make money trading Forex if you do not know much about it? Below we will list and analyze three most profitable instruments to trade in the foreign exchange market in 2020. As a sweet bonus, in the end you will get your hands on a step-by-step guide on how to get started.
We have already established that Forex is an international currency market. With this in mind, we are going to pick the most promising currencies as far as the profit goes.
The American dollar has been maintaining its status of a global reserve currency for many years now. During the crisis, the U.S. dollar remains in high demand since investors see it as a safe-haven asset.
In the presence of panic and uncertainty, global investors and traders start buying the U.S. dollar, and its price begins to go up. Speculators use this opportunity to profit from the growth of the American currency.
There is another factor that makes the U.S. dollar so appealing. When the coronavirus hit the United States and most companies had to put their operation on hold for the quarantine, the U.S. government and the Federal Reserve System (i.e. the central bank) had to implement unprecedented measures to support the economy. The interest rate was reduced to record low 0.25%, and an unlimited quantitative easing program was launched.
Aside from that, the government approved a set of measures to support business and the population by pumping $2.3 trillion into the economy. A couple of weeks later, the FRS announced the same amount of monetary injections.
This way, the American economy was flooded with money. When this happens, the U.S. dollar is supposed to decline, with its exchange rate plummeting. For now, the fear factor is what prevents this from happening. However, when quarantine is over and the U.S. economy starts recovering after the crisis, we might witness the drop in dollar.
You can make money in the Forex market in the presence of volatility i.e. price fluctuation. As you can see, there are plenty of preconditions for increased volatility of the U.S. dollar, so you will be able to profit from both its growth and decline until the end of the year. Simply take a look at the chart and see how the volatility of the US dollar increased in March.
To make money trading Forex, you need to pay attention to global processes. The coronavirus pandemic coincided with another major event that took a huge toll on the global economy, namely a plunge in oil prices. After Saudi Arabia and Russia failed to reach a production-cut agreement in early March, the quotes plummeted by 30%. Later, the oil price drop reached 50%.
Such a huge plunge in commodity product prices will have a major impact on the so-called commodity currencies, one of which is the Canadian dollar. The country's budget depends on oil sales, which will decrease dramatically following the oil price crash.
It is worth pointing out that oil prices will not return to their 2019 values in the next 12 months, or even for a longer time. This is explained not by surplus production alone, but also a global contraction in demand due to the coronavirus pandemic. This means that the Canadian economy will suffer a hit, the Canadian dollar will fall, and traders will be able to make a profit by trading currency pairs that include the Canadian dollar.
The oil prices had already fallen to $25 per barrel in 2015 and 2016. At the time, the USD/CAD pair hit its highest level, which was once again achieved in March 2020 against the backdrop of a massive drop in the price of oil.
Due to Brexit, the British pound has been in a state of turmoil since 2016. The currency first plunged as the results of the referendum were announced. After that, it soared as the hopes rose that an agreement with the European Union could still be reached. Once those hopes crashed, it plummeted once more; however, went up again when the United Kingdom eventually broke from the EU on January 31.
That said, the "divorce" with the European Union still has few additional items yet to be finalized. By the end of the year, Brussels and London need to agree on a deal stipulating new terms of cooperation. There has not been a significant progress in negotiations as the coronavirus pandemic slowed it down altogether. Since there is a possibility to not strike a deal as planned, the sterling will continue to fluctuate dramatically.
What this means for traders is that pound’s volatility will remain high, and there will be a good chance to make money on price changes. By taking a look at the GBP/USD monthly chart, we can see that as far as the medium term goes, the pound has growth potential especially against the drop of the U.S. dollar.
If you have not traded in the foreign exchange market before, but have a strong desire to learn how to make money in Forex and take advantage of the aforementioned opportunities, here are 4 steps you will need to take to earn your first profit:
1. Gain an understanding of the intricacies of the Forex market by completing a basic training course for the newbies. You can do that with a chatbot brought to you by Gerchik & Co.
3. Master the art of a technical market analysis, learn how to identify important levels and entry points. It is best to have an experienced mentor to walk you through it.
4. Once you acquire all the necessary basic knowledge and skills, you can proceed to opening a live account and start making money on the currency exchange with our list of Top 3 instruments to trade in Forex in 2020.