When Should You Leave The Forex Market Alone?

When Should You Leave The Forex Market Alone? - Trading Dispatch

If this week has taught me anything, it’s that you can never be too sure because you never know what’s coming or when it is coming. This past week we witnessed the US elections, and with that came volatility.

As traders, we love volatility. We love movement in a bearish or bullish direction. It doesn’t matter to us, as long as we see movement to capitalize on. However, sometimes traders can’t handle the volatility, and that is not because they are bad traders but rather because the Forex market is unpredictable.

The fundamental aspect of the market drove price movement this week. With Donald Trump and Joe Biden racing for the presidential seat, the markets fluctuated (for all USD pairs, Gold and Oil) when either party was in the lead. This was because the market sentiment for a democrat victory vs. a republican victory was totally different.

So what does a trader do in this situation?

Personally, I think beginner traders should remove themselves from the Financial Markets when there are major events like elections unless they have done adequate research and have the strong psychology required to place trades that follow their system.

The US Elections are an important event, especially the presidential election that occurs every four years.

Reasons to stay in the market during these events

  1. There is potential for gain. If you know what to expect or how to react when a certain party is elected.
  2. You learn how the markets move during high impact events and make mental notes of these movements. Thus you have experience when the next election comes around.

Reasons to stay out of the markets

  1. If you are not experienced, it is also good to stay away and preserve your capital.
  2. You can still learn why certain moves occur in the markets, but your money is not at risk. A good option might be to trade this event on a demo account. That way you will not incur actual losses, but still learn by trading the event. 

Summary

  • You have to decide for yourself what is best for you as a Forex trader.
  • Watch these events closely and learn what to expect from each outcome.
  • Always be prepared.

 

Side note – If you want to gain an understanding of fundamental events such as this, I suggest you watch Bloomberg or CNBC and soak up knowledge from economic experts.

Enjoy trading!

Share This Post
Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on telegram
Share on email

Related Posts

Emmanuel Maphosa

Emmanuel Maphosa

Risk Disclaimer: 

  1. The information provided on this website is not intended as a financial or an investment advice and must not be construed as such.
  2. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.31% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
  3. FXCM is licensed by the FCA in the UK and other leading regulatory bodies in other jurisdictions. FXCM Markets is not required to hold any financial services license or authorization in Bermuda to offer its products and services.
  4. Plus500 is licenced by the FCA, CySEC, FMA, FSCA, and Seychelles Financial Services Authority.
  5. AVATrade is licenced by the Central Bank of Ireland, ASIC, B.V.I Financial Services Commission, FSCA, and ADGM.
  6. OANDA Global Markets Ltd is authorised and regulated by the B.V.I Financial Services Commission.
  7. Trading Dispatch may be affiliated with parties included in links.

This website uses cookies for optimal performance. By continuing to use this website you agree to the Privacy Policy