Global Financial Crisis and the Forex Market

The crisis is spreading like a cancer and as the days pass it becomes increasingly difficult to abstract from it. By this time almost no profitable sector of the economy is immune to the effects of the financial debacle and even the wealthier segments of the population had to adjust their belts. The Foreign Exchange has been one of the exits all of those seeking to protect their investment have taken.

Investing in the Forex Market, as well as in the Stock Market, in times of crisis could be risky and good at the same time due to the high volatility in the markets which provides an extreme sensitivity to any asset. This could bring two possible consequences: being the market so sensitive to changes the first consequences is that people could lose large amounts of money in just one transaction, but looking at this from another angle, people could also win large amounts of money if they put their money in the right place at the right time.

But how could you know where and when to invest? Anyone who invests in foreign currency exchange should analyze what are the economies most affected by the global crisis, and from there, deduce which currencies could get devalued, and which could benefit from this situation. By doing this, people could get an idea of which are the best currency pairs to invest, taking into account all the market and broker’s parameters such as pips, spread rates and leverage, among others. Which leaves us only with the question: when to invest?. Knowing the exact time to make a transaction in the FX market is almost impossible, but following trends as well as the news of the countries involved is a really important step.

That’s the main idea of trading in the Forex Market in time of crisis, but going a little bit further, a good way to reduce the risk, when trading in these conditions, is to share the invest between a certain number of currency pairs instead of just focusing in one. This will increase the investor’s probabilities of generating profits in a transaction and will keep him away from losing time or/and money with just one currency trade. Trading with many different currencies is the best way to protect your investment, because there are lots of currency pairs and you can choose some of them, start trading, and if it doesn’t work for you, you can always rotate and trade with other currencies until you find the perfect pair for what you need.