In June 2016, the citizens of UK voted to exit the EU. With the UK government having enforced Article 50 of the Treaty on the EU, UK is set exit the EU come March 29, 2019. Of course this has affected forex trading and is expected to remain so at least until the UK finally exit the EU. Even after that, the uncertainty may stretch further for an unanticipated period of time.
Brexit has been seen as the circumstance that has caused restrictions in the forex market, especially to UK forex traders. With many investors increasingly shunning British founded financial systems; it is likely that many investors will opt to use other types of currency as opposed to the pound. Since currency is derivative and liquid based, investors will still be able to make profit regardless of the deteriorating forex market, characterized by barriers and speculations against the pound, with many investors waiting to see how it will perform against other currencies especially the USD and the EURO.
Various happenings in Europe and the USA in the year 2017 have continued to affect forex trading. Many currencies have declined since then and this trend is likely to remain significant in the forex market for longer. Many traders are finding it difficult to launch profitable strategies, a predicament that may discourage forex traders in the UK from making currency investments. As a result of this, the forex market activity is bound to drop which may lead to a fall in the economic prevalence.
Today, foreign exchange popularly referred to as forex exchange is one of the most traded markets globally. Trillions of pounds are traded every day and this amount is expected to increase exponentially along the years. Traders vary from big corporate companies to individuals. With the increased use of the internet, forex trading is set to become more popular as many people discover the same through social media platforms.
There are various factors which determine currency shifts including major disasters, global events, economic and political stability, monetary policy, and currency intervention. Forex trading is executed in pairs and the trader makes a projection sighting the anticipated exchange rate variation between the two currencies. Their projection will determine the currency they will purchase. Assuming that their projection is right, their currency of choice will rise enabling them to sell it at a profit. If the opposite is true, then they will lose.
For instance, USD/GBP indicates the number of pounds a dollar can buy. Assuming the trader thinks that the dollar’s value will increase against the pound, they buy the dollar using the pound. In the event the exchange rate increases, then they can sell the dollars and gain profit. Generally, forex trading has become popular among investment connoisseurs because the markets remain open throughout globally.
Forex trading is quite popular among traders in the UK. However, it is risky and has been compared to gambling. Individuals who want to join the world of forex trading can read through various books and tutorials available online. Some experts claim that traders can make a fortune in forex trading. However, it is worth mentioning that many traders incur losses every other day. Executing currency transactions can be an expensive idea and while huge companies may make a substantial amount of profits, making big profits as an individual trader can be an arduous task.
If you are a novice forex trader, it is advisable to invest money that you can afford to lose. Potential investors may not find comprehensive information regarding forex trading and how to make a profit. While there are financial advisors and brokers willing to advice would be traders on basic investments and the magnitude of risk involved, many individual forex traders have learnt the skill by themselves, either through research or consulting from expert traders.
Tutorials and guidelines may paint forex trading as an affluent venture and promise you huge returns within a short period of time. Do not believe such promises. It is important to read and research widely before venturing in online trading. Forex exchange is a risky activity that many tutorials never talk about. Where possible, identify a successful expert trader and learn the trade from them.