Coronavirus in context
Pessimism and negativity have filled up the financial market in the past few weeks as the world gets all tensed up about the coronavirus pandemic. This unprecedented crisis where more than 300,000 people are infected worldwide is causing major chaos and panic everywhere.
With the government all around the world shutting down the borders one after another and asking people to stay at home, traders are encouraged to do their part for the sake of everyone’s health and well-being. Practicing social distancing is also another act for preventing the nation’s health care system from getting overwhelmed by coronavirus patients.
The financial market might not be in its best shape during this public health emergency, but it doesn’t mean that this is a bad time to trade. The high volatility market offers a plethora of trade entry opportunities as the fluctuation of the currencies is higher than usual, it can be a lucrative opportunity for traders, especially day traders to gain and grow their trading account. While the economy is temporarily on a downfall, traders can go for the short-selling option instead of only trading when the market is surging. There are always two ways in trading, meaning that no matter how does the market goes, the chances of gaining profit will always be there.
Albeit the coronavirus continues to wreak havoc on the retail supply chain globally hence the economy, the public is encouraged to not panic and practice normal spending. With the public spending money and making purchases online, this gets to maintain the money flowing in the country and avoid economic growth from stagnation. Spending and buying in moderation can also make sure everyone gets what they need at home during this difficult period. Don’t hoard groceries that you don’t need, now is also a time for us to have extra empathy for others.
While the pandemic indeed sparked a market correction – which is what we are witnessing now, their implications are tended to be relatively short-lived. There is no need to be panic, let alone panic trading. In fact, it can be a good opportunity for traders to profit and embrace these kinds of market conditions as the price of the currencies will definitely be lower at the moment. Remember, fear and panic will only entice you to make irrational decisions that bring you losses.
If you are just started in the trading field, try to go gradual and diversify your trades and investments. Allocate your assets in different types of currencies and markets, never place all of your eggs in one basket. Manage your trading risk by using a wider stop loss and an adjusted position size. These measures can come in handy when the market faces unexpected volatility while you are not monitoring.
Beijing has successfully contained the spread of coronavirus with a drastic drop in infections. The supply chain in China is gradually recovering as restrictions are being eased and the rate of resumption of work at its factories and provinces is inching up. Even though the recovering pace might be slow, it can still be a good sign for market sentiment.
With most of the countries shutting down and closing their borderlines, policymakers have rushed to limit the worst of the economic pain by introducing multiple broad-based stimulus measures and governments committing to multi-trillion-dollar fiscal initiatives. The rising economic toll of the coronavirus has had European leaders to come together and pledge hundreds of billions of Euros to prevent the outbreak from provoking a financial crisis. The Bank of Japan has also announced a $4 billion coronavirus package in order to bolster the fragile growth of the country. More monetary measures are expected to be released soon to stem the bleeding in the financial market.
By slashing the interest rates to near-zero and introducing a massive $700 billion quantitative easing program, the Federal Reserve aims to cushion the economic blow from the pummeling financial market and boost up the market sentiment in the United States. US dollar traders are encouraged to be extra vigilant as the dollar might experience extra volatility in the upcoming weeks.
To conclude, compounding anxiety is definitely not one of the best things traders should be doing right now. Manage your trading risk well and keep your money in the market so that you don’t miss out on the eventual rebound. Keep in mind that every crisis is also an opportunity for traders to reap profits.
While practicing social distancing, make use of this newly found free time to focus on your self-education and practice your craft. Stay hydrated and have ample rest.