If you want to know how national and global events affect the foreign exchange market, all you have to do is look at Brexit and see what happened to the British pound as a result. Who could have foreseen that one of the world’s best performing currencies would be knocked right off its perch and even predicted to collapse entirely by the end of this year?
The best in the Forex business keenly follow events to try and predict what might happen to the currencies they’re interested in — US Dollar, Yen, Sterling, or whatever else. Just like the stock market, the aim is to get in at the critical time and make an absolute killing before the currencies’ values change. Who can forget what must surely be the biggest currency speculation win of all time? That would be George Soros and his billion-dollar payday for betting against the Great British Pound.
We don’t all have to be a billionaire currency trader, however. Nowadays, many small players are actively involved in the Forex market, carefully following developments and making small trades along the way, with the aim of making profits. It’s no wonder Forex courses for beginners have become so popular in recent years — giving people all the essential Forex information and training they need to become a fully fledged trader in their own right, even if working part-time and from home. Indeed, for many, basic online beginners Forex courses are the starting point in their trading career.
Breaking News and Broken Currencies
The big news of the day certainly has the potential to impact on all types of currencies, in positive as well as negative ways. If an election result doesn’t go according to predictions, for example, and a controversial party wins a majority or most votes, it could be destabilising not just for the country, but its economy and currency. Most people — and analysts and pollsters — took the view that the British would vote in June 2017 to stay in Europe, but the opposite occurred, severely rattling the entire nation and its currency.
Clearly, when war breaks out, it has the potential to be catastrophic for everyone involved. Obviously there may be a great deal of tragedy involved, as well as a loss of human life, and no-one is suggesting that currency speculators are preying on what’s happening. It’s certainly not to say that people are seeking to profit from the misery of others. But if the conflict is going well for a particular country involved, and it’s seen as dominant in the war, it could work to boost its currency. It’s developments like this that Forex traders will be looking for.
Other events that can have ripple effects on the financial markets, including in the Forex world, are all the various natural disasters that can strike at any time. From earthquakes and resulting tsunamis to massive floods, volcanic eruptions and more, these country-stopping occurrences can bring an entire economy to a halt and send its currency into freefall.
Signs of Impending Bad News
Forex traders, many of whom will surely have taken Forex courses for beginners, are always on the lookout for indications that something can go awry in a country and affect its currency, thereby providing opportunities to make some profitable trades. Continuing and increasing unemployment figures, for instance, are certainly a worry that all may not be right and a country could be headed for economic trouble, as could poor manufacturing and export data.
On the flip-side, improving economic metrics are proof that a nation is heading in the right direction, with its economy on the up and perhaps a strengthening currency. These are all aspects that Forex traders need to constantly monitor so they stand better chances of being successful in the market.
And now, as Brexit talks with the EU are reaching a climax, who’s to say that Mr Soros won’t take another enormous punt on the pound?