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The impact of COVID-19 on Forex trading

The business world has negatively been impacted by the rise and spread of Covid-19 around the globe.

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The business world has negatively been impacted by the rise and spread of Covid-19 around the globe. The unexpected pandemic has had devastating effects on investors. Forex brokers that facilitate the buying and selling of foreign currency, however, have ended up doing better than they did in the tough trading year of 2019. Economies worldwide have been hit hard by a significant decrease in the movement of goods and individuals. This phenomenon particularly effected the top 10 world economies. At the end of the 2020 year, there is nothing much to show from traders in other quotas. The market was full of uncertainties and increased risks that affected the amount of returns on the stock market.

Covid-19 affected the whole world having started in Wuhan, China. No one anticipated this ordeal would have such a horrendous effect on economies worldwide. It is believed to have hit harder than the ravages of the 2008 global economic recession. Major stocks suffered an immense decline after the coronavirus was proclaimed a pandemic.

The Forex Market and Covid-19

The forex market is the world’s largest liquid financial market that actually experienced a positive shift. Forex traders in 2019 had suffered from low market volatility. As a result, they feared to buy and sell pair currencies online. This affected the forex business on a global scale. Money is earned through the forex market by "winning the spread," simply defined as gaining on the difference between the asking price and bid price. In 2019, low trading volume resulted in low revenue.

At the start of 2020, Forex brokers faced a different story. With the pandemic damaging economies, the forex market continues to thrive despite the strain on other financial markets. The forex market has experienced a lot more movement than other markets. There have been pleasant reports from forex brokers that have experienced remarkable profits and a rise in trading volumes in 2020 compared to 2019. Saxo Bank reported a surge in trade volumes in February for most brokerages around the globe.

Saxo Bank is a typical example of the positive earnings of forex trading in 2020, seeing a Forex trading volume of $143.9 billion - a 24% increase from the previous year. The same trading increase was reported by other forex brokers including: ADSS, ATFX and eToro.

Increased Forex Trading Amid Coronavirus

Opportunities have continued to open up with the strong volatility experienced in the forex market. This has effected the price swings, a trend that is good for forex traders. The trading of currencies, indices and commodities has increased on the forex brokers trading platforms. The implementation of lockdowns to curb the spread of Covid-19 has led to the confinement of people in their homes. Due to employment uncertainties, many have tried their hand at the financial markets.

From the comfort of their homes, people have flocked to trading platforms in an attempt to gain inside information about foreign currency trade, thereby boosting market activity. Forex brokers have been declared winners in the financial markets in 2020 despite the coronavirus pandemic. As the world continues to remain at a standstill, forex markets continues to thrive and yielded good returns for traders. Many people who had never tried forex trading, finally got their chance in the past year.

The COVID-19 pandemic ended up a blessing in disguise for financial markets, particularly forex. The question remains, “Will this upwards trend continue?” With the future remaining the "Big Unknown", investors should continue studying market trends and making necessary adjustments to have the best chance of earning money in the forex market.



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