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Here's How to Make the Most Of The Fragile Market

Forex traders profited from Brexit and Trump. What’s next?

by Xavier Basil

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It’s probably something of an understatement to say that 2016 was a fairly turbulent year. Whatever your political persuasion, the EU referendum result and the election of Donald Trump as US President undoubtedly sent shockwaves across the globe and we’re yet to truly understand the full impact of either.

Where there is turbulence there is fragility in the markets, large swings up and down that are able to wipe big money off the value of companies, or indeed whole countries, in a matter of a few hours.

There’s little evidence to suggest that things have calmed down just yet. Every day people awake to the latest round of tweets from across the Atlantic as the new President settles in to life in the White House. He’ll have plenty of landmark moments and policy announcements to come in his first 100 days in the role. The UK also now faces a couple of years of intense negotiations as it looks to exit the European Union, with plenty of road bumps along the way that could spook the markets.

Not only that, but key elections await in France, Holland and Germany, which might all have an impact on the economy in Europe and beyond.

Fluctuations in the markets provide many opportunities - including shares in the right companies – but, as The Market Mogul notes, the best opportunities stem from changes in currency rates.

As a result, smart investors in the UK should look at forex trading as a way to capitalise on the circumstances of the world around them. Indeed, about 40 per cent of all currency trading happens in London, making the UK one of the key world leaders in this form of investment.

Forex itself is actually the largest financial market in the world with more than $5 trillion dollars converted every single day. About half of the trading in this sector is done by banks but there’s no reason why they should have all of the fun. As and when big world events – such as those outlined above – occur, the ripples are felt here. The Brexit result proved lucrative for forex traders, for example.

2017 is also the year in which a global code of conduct is embraced by the world of foreign exchange trading.

Coming in May, this offers reassurance for traders, with the promise of ‘integrity’ and ‘effective functioning’ of the market as a whole.

As Guy Debelle, assistant governor of the reserve at Bank of Australia, put it: “In a globalised world, the foreign exchange market is one of the most vital parts of the financial plumbing.

“One of the guiding principles underpinning our work is that the Code should promote a robust, fair, liquid, open, and transparent market.”

Forex trading, therefore, is not only ideal when it comes to spotting and capitalising on events in a fragile world, but it’s also in a strong position as a robust market that can – with a bit of smart thinking and the right advice – be used to make good returns.

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