Covid-19 has caused a major stir in almost all sectors of life, and as always, financial markets feel the most heat during these uncertain times.
The markets have plummeted since the virus began to spread.
To give you an overview, here’s how the markets have been performing.
- S.D reached above 102.5 levels, which were not seen since 2017.
- The S&P 500 dropped 30% since the pandemic.
- The EUR/USD has tumbled over 850 pips since the start of March.
- Oil prices collapsed over 60% during these times.
- Gold prices rose past $1,700 per ounce
The psychology behind market uncertainty
In times of uncertainty, traders are not willing to take risks. They look for safe heavens like USD and Gold and sell risky assets. Also, traders like to liquidate their positions in losses. This creates an imbalance between the supply and demand ratio and the financial markets go uncertain.
How has forex trading been during this pandemic?
According to statistics provided by financial experts, in the first quarter of the year, trading volumes in the Forex market rose. In February, market participants recorded the results of volatility. This was especially noticeable at the end of the month.
Most brokerage firms noticed that trading volumes rose to record levels in March because the pandemic increased activity among traders. During these three months, high volatility was recorded in the markets.
Between April and May, we saw a significant drop in USD. The dollar index was trading below the 100-mark. This affected currency pairs like USD/JPY, EUR/USD. The AUD/USD dropped then rose again.
What can you do?
Here are a few steps you can take during these uncertain times.
- Take regular breaks when you can
- Always use stop-loss/take-profit
- Focus on the risk-reward ratio
- Keep track of market news