Trading During the Coronavirus Pandemic

There is no doubt about the fact that the coronavirus pandemic has had a massive impact on the financial markets. Forex markets are seeing massive volatility swings, stock markets are equally as volatile, and commodities are suffering. There is no denying that the coronavirus pandemic has impacted the world economy in a way that nobody predicted just a few months ago.

However, the reality is that times are uncertain, and with the ever looming threat of second and third waves of the coronavirus erupting across the world, investors and traders alike are uncertain of what comes next.

Yes, times are tough, and while many countries are seeing record unemployment, issues with food security, a drop in commodities prices, as well as stock market and currency price fluctuations, this does not mean that you should cut and run. Even if the market continues to spiral downwards, this doesn’t mean that there are not opportunities to profit as a trader and investor.

Today, we want to provide you with some essential tips for investing and trading during the coronavirus pandemic. If you follow these tips, you might just manage to come out the other side of this coronavirus pandemic in better shape than when it all began.

Stop Panicking Over The Coronavirus Pandemic

One of the worst things that you could do right now during the coronavirus pandemic is to start panicking. If you are panicking and have been feeling stressed out, take a step back, evaluate your holdings, and go from there.

Folks, as markets are seeing great volatility, with many stocks and commodity prices plummeting, you might be tempted to sell everything and to cut your losses. While this may be an alright decision for the short term, in case you need a few dollars to survive, it probably won’t do you any favors in the long run.

The fact of the matter is that the market is cyclical in nature, which means that the market always sees upward and downward movements, and these cycles can take years. Although the market is currently not in the best condition, selling off all of your holdings is not a great idea.

Sure, your assets might have decreased in value right now, with the short term seeming quite bleak, but most of your holdings will likely increase in value once again. Although the economy may not recover for years to come, eventually your investments should go back into the positive. The bottom line is that you shouldn’t just sell off everything that is currently dropping in value.

Of course, if you see that a certain stock or commodity is dropping big time, and does not show signs that it may recover any time soon, then it is up to you to make a judgement call. However, panicking is not going to get you very far.

Take Advantage of Current Market Conditions

Although selling off all of your assets right now is not a great idea, something you can do is to take advantage of falling prices in the stock and commodities markets. This is also true for foreign currency exchange trading. Investing and trading doesn’t only go one way, or in other words, you don’t only make money if currency prices, stocks, and commodities prices increase.

You can also open short positions and make money when prices drop. You just have to know when prices will drop, what prices will drop, and maybe how far as well. The point here is that just because prices have been falling does not mean that you can’t make money. You just have to gauge which asset prices will move and in what direction they will move.

You can make money in bullish and bearish markets, as long as you make the right trading and investing decisions. Although the coronavirus pandemic is wreaking havoc on markets, especially for people with current investments, you can always make money by opening new short positions too.

Consider Investing in Safe Haven Assets

Something else to be aware of is that although many currencies, stocks, and commodities have taken big hits during this coronavirus pandemic, it doesn’t mean that all currencies and asset types cannot be profitable.

 For instance, there are various safe haven assets which have not been largely affected, with some even increasing in value. If you are worried about your investments losing money, but you still want to invest and trade, going for safe haven currencies and assets is strongly recommended.

For instance, the United States Dollar, the Swiss Franc, and the Japanese Yen all make for fairly safe investments right now. Moreover, gold, defensive stocks, and cash all make for good opportunities right now.

Be Weary of Commodities

Another tip which many financial experts are giving their clients is to stay away from the commodities market, at least in terms of making any purchases. The fact of the matter is that during the coronavirus pandemic, especially in recent months, the demand for various commodities has taken a huge hit.

This is true across the board. Just think about how the hospitality industry, the manufacturing, and other market sectors have taken huge hits. The pros are predicting that commodities will continue to suffer. However, with that being said, this does open up the opportunity to open short positions and make a profit from falling commodity prices.

Forex Trading During the Coronavirus Pandemic – Stop Losses

Even if you want to keep trading Forex full tilt during this coronavirus pandemic, something you should be doing now more than ever is to take advantage of stop loss orders. Markets are very volatile, and even if you are a pro trader, market conditions can change very quickly.

Take your eye off of your open positions for a few minutes, and you might come back to see big losses. Therefore, taking advantage of fully protective stop losses that can shield you from huge losses is essential. Liquidating positions at the end of each day to avoid overnight exposure is not a bad idea either.  

 

Investing & Trading During the Coronavirus Pandemic

The bottom line is that just because the coronavirus pandemic is wreaking havoc on many market sectors does not mean that you can’t make money. Follow the tips which we have outlined here today, and you might just stand a chance.

 

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