The foreign exchange world is dynamic and exciting – and for the traders around the world who contribute to its several billion dollars a day in value, it’s one that can also be lucrative. However, no market stays the same forever. There are all kinds of risks and opportunities on offer in the forex world: from technology and Brexit to scams and fraud, there’s plenty for a forex trader to watch out for.
Impact of technology
Technology is going to play a big role in the way that the forex market develops in the coming years. Already, traders are benefiting from the increased flow of fundamental market information that the internet offers. However, there are also direct benefits. High-frequency trading, for example, means that bulk or often-repeated orders can be placed with a minimum of effort through the power of software. Even ever-faster broadband internet speeds could lead to benefits for traders, as lower time lags mean that there’s less chance for markets to change in the gap between placing an order and it being fulfilled.
The Brexit vote
Brexit is likely to affect everyone – including those who are immigrants to Britain, and who may wonder what the future holds for their citizenship. For traders who invest in the pound or the euro on a regular basis, the Brexit vote is one of the most significant news items on the horizon. When the vote took place and the results became clear, the value of the pound dropped to a low not seen for over 30 years. However, the Brexit vote also affects other currencies.
This is because the dollar index – a tool that measures the performance of the UScurrency compared to a basket of six other currencies – is slanted towards the euro, and also includes the pound. When these two currencies decline in value, the value of the dollar can shoot up – so when Britain leaves the EU in March 2019, traders around the world are likely to keep their eyes peeled for any changes.
Scams and fraud
There’s nothing new, of course, about the existence of scams and fraud, but there is something new about the way that they attack the foreign exchange market. Given that so much of forex trading now occurs online, it’s no surprise to learn that forex scams happen on a regular basis. Reputable forex brokers are essential in this changing market, and using common sense to judge whether claims are too good to be true is also useful.
The future of the foreign exchange markets is one that’s a little uncertain. However, there are some ways that those who need to know about how it might turn out can do some forecasting. The risk of scams and fraud is one that many people fear, for example, and taking steps to mitigate that is key. Also, by researching as much as possible about the impact of everything from tech to political and economic issues, it’s possible to defend yourself against the risks that a changing marketplace poses.