COVID-19 has had a devastating effect on just about every type of financial market in every country around the world. The effects the virus and government protocols have had on livelihoods, businesses and companies have been significant. Though the pandemic is far from over with case numbers rising in lots of places and no vaccine announced yet, life is starting to return to some semblance of normal for many of us.

In this article, we’ll have a look at how forex trading, the act of exchanging currencies, has grown in popularity throughout the pandemic and what the future holds for it. Forex markets are the largest type of financial markets in the world thanks to their excessively high value and turnover, not to mention their liquidity. While trading has experienced significant growth during the pandemic, this may not necessarily be a good thing.

The Effects Of COVID-19 On Forex Trading

The pandemic has affected just about every aspect of modern life in some way or other. One, in particular, that’s been hard hit is the retail sector. Many businesses big and small, have been forced to close for weeks or months and have subsequently had to permanently lay off staff. Many big-name companies have announced redundancy numbers in the hundreds or even in the thousands as they cope with the devastating effects of the pandemic.

What many retail investors are doing is they’re switching from investing in the unsteady retail sector to taking advantage of trading opportunities offered by the forex market. They don’t see many opportunities in retail investment right now, and they think that the future prospects for this sector are far from lucrative. The forex market, on the other hand, is a much safer investment option.

The growth in forex trading can also be attributed to those who already trade in this market. Many experienced traders will have had more time on their hands in recent months, giving them more opportunities to engage in forex trading.

Forex trading is welcoming newcomers and some people who already practised trading are doing so more than ever before. The upsurge inactivity, may, however, only be a short-term effect of the pandemic. It’s too early to tell whether the amount of trading will remain steady in the coming months and into next year, or whether it will gradually decrease.

The Risks Associated With Forex Trading

There is a key problem that’s caused by a sharp rise in the amount of forex trading going on. That problem is volatility. While many traders have continued to experience success and make money, some have had rather damaging losses. Brokers have put this down to growing numbers of traders taking advantage of the exceptionally high leverage that forex trading offers. High leverage gives traders the chance to make quite generous profits, but at the same time, big losses can be made.

In fact, it’s been found that nearly three-quarters of retail traders end up losing money when they start forex trading. What’s more, is that just 1% are successful in making successive gains across four consecutive quarters.

The Attraction Of Forex Trading

Forex trading can be volatile, and there’s no guarantee of making any money. So why are so many people turning to it? The answer is simple: forex trading is easily accessible. Much of the software that’s used is designed with beginners in mind and to get started, you don’t necessarily need to have a large bankroll. Some traders experience success despite starting with little knowledge and a rather limited budget to spend.

There’s also the potential to make lots of money. As previously mentioned, this is in no way guaranteed and there’s quite a big risk of making a loss. Even so, many people accept the risk and are prepared to try trading out in the hope that they’ll make at least some profit, however small.

The Future Of Forex Trading

The ongoing ramifications of the COVID-19 pandemic and the increasing numbers of forex trading are making forex trading more volatile than ever before. What’s almost certain is that it this volatility will be here at least for the rest of the year and into most, if not all, of next year. Currency exchange rates around the world are bound to experience changes, both sudden and drastic, as restrictions are lifted and new measures are imposed.

One industry, in particular, that’s worth keeping an eye on is the travel industry. This is obviously severely affected by the pandemic, with billions of people ordered to stay at home and countless holidays and trips cancelled. International travel has already started picking up. Hopefully, it will continue, and things can get back to normal. If anything, forex trading is likely to become even more popular than what it currently is as people start travelling abroad more.

Climate change has been a very hot topic over the last few years. It’s always been an important issue, but recently it’s become one of the key talking points and debates in modern society. The Managing Climate Risk in the Financial System report was recently released, having been commissioned by President Trump’s Commodity Futures Trading Commission (CFTC) last year. It has issued stark warnings about the potentially devastating short- and long-term effects that climate change may have on US financial market.

The report – the first of its kind – also lists a number of steps that can be taken to help safeguard markets and lessen the impact that climate change-related disasters may have on them. It was released as wildfires continue to spread in some western states; at the time of writing, half a million people in the state of Oregon have been forced to evacuate their homes.

What’s particularly challenging about climate change is that it isn’t just a single incident that affects everyone at the same time, like COVID-19. Instead, it’s a long-term phenomenon that can affect different areas at different times. While western states are currently experiencing wildfires, next year it could be another part of the country that suffers from climate change, for example. There’s no way of accurately predicting when the next big climate-related incident will happen and how big of an effect it will have on local and national markets.

Key Points in the Report

The report focuses not on the physical consequences of climate-related disasters as such, but on the impact, these things can have on financial markets. Its core message is that regulators must acknowledge the huge risks associated with climate change. They must appreciate just how much of wide-ranging effect things like storms, droughts, wildfires and other similar disasters can have on financial markets. A single disaster can have not only devastating short-term effects but also long-lasting ripple effects that continue to wreak havoc long after the disaster is over. It can also put a significant dent in a country’s long-term economic growth, setting it back months or even years.

According to the report, there’s simply no better time than right now for regulators to step up and start working towards safeguarding financial markets. They should come together and make sure they understand what the current risks associated with climate change are and what can be done to lessen the effects on the markets. Disasters are happening right now, and action is needed urgently.

Potential Solutions

The report offers a number of potential solutions for regulators to consider enacting. Many of these are ones that have been proposed before. The creation of a tax on carbon is an example of a proposal that’s previously been suggested. Others include reforming derivative markets by introducing new contracts and disclosing the climate-related risks that corporations face in a much better and effective way.

An issue that Heath Tarbert, the CFTC’s chairman, brought up was that making too many drastic ‘green’ changes too soon could also be detrimental. He mentioned that transitioning to a greener way of doing things too quickly could have just as disruptive an effect on the country’s core financial system as not doing anything at all. In other words, he believes there has to be a fine balance between the state of the country now and where it’s going to be in the future. The right steps have to be taken at the right time to protect the economy and reduce the negative effects on financial markets.

Getting Things Right

So while the report looks at what can be done in the near future to protect financial markets as the country goes greener, people in all sectors have to be prepared to adjust and adapt. Changes in policies affect companies of all types and sizes, so it’s incredibly important that care is taken to lessen the risks as much as possible. If markets can’t keep up with changes in not only policy but also in technology and consumer preferences, they could end up suffering.

Moving forward, it’s vital that the effects of going green on everyone and every type of business or company are taken into account. The challenge facing policymakers right now is how to move towards a greener way of doing things without sacrificing businesses or any size and without causing too much disruption to financial markets. It may be inevitable that some short-term damage is done, but that may be a small price to pay in the ongoing fight against climate change.

It remains to be seen just what will be done to hopefully protect financial markets and reduce the potential consequences of climate change. The presidential election later this year will no doubt have a significant effect on the country’s approach to going green, with Trump more of a climate change denier and his opponent Biden more in favour of climate change policies.

Many of us would love nothing more than packing in the day job and doing something completely different. Trading stocks is a potential career option that lots of us find appealing. Why? Because of the potential to make huge amounts of money. In this article, we’ll go over trading stocks for a living and whether this is something that’s easy to do or not.

What You Need To Trade Stocks

Markets can be highly volatile. Trading stocks, therefore, is unpredictable at times. There’s no way to predict exactly how much profit – if any – you can make from it. Even if you make a lot of money one year, the next year you could well lose it all. Despite this, many people are attracted to the idea of trading stocks for a living because they want to make more money, work whenever they want and not be constrained by the trappings of a traditional job.

So what’s needed to get started with stock trading? We’ll run through the basic things you need:

• Education. A very important thing you need is education. You should have in-depth knowledge about finance, business, economics – anything at all to do with money. Learn about the ins and outs of trading, what the different types of trading are and what resources and tools are available. It’s also strongly recommended that you keep up to date with the latest goings-on from around the world.
• Strategy. What’s also important is that you come up with a strategy. Do plenty of research and think of the approach you’re going to take to trading stocks. It can take a significant amount of time and investment to see whether your strategy is successful or not, so make sure you’re prepared for that. Also, you may need to create a strategy with some flexibility so you can work around any unexpected occurrences.
• Money. It goes without saying that if you’re going to trade stocks, you need some money behind you. First of all, you need to make sure you’ve got enough money set aside to cover living costs and any other necessities. If you’re really serious about trading stocks and want a good shot at becoming a professional, you’ll need a pretty big budget to get you started. Some would recommend starting with a sum equal to a year’s wage. The more you have to invest, the better.
• Time. As well as money, you need to have a lot of time to invest in stock trading. For your best chance of succeeding, you should have sufficient time to do your research, build up your knowledge, keep on top of the latest trends and make informed decisions about what to do.
• Determination. Trading stocks isn’t a get-rich-quick scheme by any means. It can be a frustrating hobby with no guarantee of success, so many people who try it end up packing it in at some point or other. For your best chance of long-term success, you need the determination to stick at it.

Can Anyone Do It?

Trading stocks might sound like a great alternative to a proper job, but it’s quite a risky hobby to practise. Due to the volatile nature of markets, there’s no guarantee that you’ll make money. In fact, the chances of bringing in a decent income from it are quite slim. Yes, some people do manage to earn a very good living from it, but they’re the minority. Most people, for one reason or another, don’t enjoy as much success. In fact, most day traders end up making a long-term loss. They give up sooner or later because they don’t want to, or can’t, spend money on something that isn’t giving them any money back.

Even if you follow all the advice and have plenty of time and money to invest, you’re still not guaranteed to be successful at trading stocks. If you really want to make money from this, it’s recommended that you try it as a part-time hobby first to see how you fare and whether or not you can make some money from it. You should only make the jump to full-time stock trading if you’ve proven you can trade successfully and you’ve got enough money to cover your back in case things don’t work out.

So, the reality of trading stocks is that it isn’t for everyone. If you’re going to stand a chance of making some money from it, you need to be very dedicated and committed. Even so, there’s no guarantee you’ll see some returns and the chances of earning enough to making a living are quite slim. Though the odds aren’t favourable, many people still try to make a success of stock trading.

Don’t quit your day job. Making a living from trading stocks is a pipe dream. By all means, practise stock trading as a hobby, just don’t expect it to become your main source of income.

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