Most veteran traders stress on the fact that there is nothing called crisis while trading in the foreign exchange market. There have also been cases where traders have doubled their returns by taking advantage of such situations. But forex is a currency exchange market, and it is expected to collapse during a crisis. So, is it possible to make money on forex in such situations? Find out.
Economic crisis, at times, is the most lucrative points to make a profit. A falling market is expected to rise again, and proper trading can reap higher profits as compared to market surge periods. Take two currencies and see is it really possible to make money on forex.
- Case 1 – Australian Dollar
Australia is heavily dependent on its exports and mostly caters to the needs of South Asian countries, China being its major customer. With the recent scenario about the South China Sea surfacing, both Chinese and Australian economies are likely to take a hit.
The UN concluded that US would continue to regulate trading in the South China Sea. This has caused some tension in between China and US. It is being speculated that China may reduce its import rates and try to find out new trading routes. This means Australia will see a decrease in export rate and AUD is likely to depreciate.
Is it possible to make money on forex for dummies by taking advantage of this situation? The answer is yes. You can wait for it to depreciate and make e purchase when AUD is at its all-time low. Purchasing is easy in a bearish market. Australia has shown steady GDP rise over the years, and AUD’s valuation will definitely increase.
- Case 2 – British Pound
Britain has recently voted itself out of the European Union. This means that the country will no longer enjoy free trading with the rest of Europe and this has already seen GBP depreciate to its all-time low. As a trader, you can make a purchase here.
Certainly, the question arises, “is it possible to make money on forex from this falling market?” Brexit also means that it will no longer contribute millions of pounds to the annual European Budget and invest the same in its own development. This might attract foreign investors to the country and result in a demand of GBP. This will appreciate its value.
Also, speculations are being made that Scotland may continue to be a part of EU. If it happens, then GBP will definitely appreciate with the Scottish making easy trades with the rest of Europe.
Thus, these two cases are suggestive of a positive answer to the common question, “Is it possible to make money on forex for dummies?” Even novices can make use of such situations and hope to increase their returns.
All global scenarios affect the market. You can also use the concept of carry trade and purchase any of these falling currencies to make a profit from differential interest rates. Economic crisis or not, the answer to “is it possible to make money on forex?” is definitely a yes.