Financial markets continue to be one of the most challenging environments due to their changing nature. Economic cycles come and go, leaving behind new ways to markets operate and as a result, forex traders are some of the people that need to find methods to adapt. The wind of change had created several important trends lately and two of them must be debated since the implications over the next few years could be profound.
As we’re about to see, technology had been one of the main factors leading to these trends emerging and it should continue to remain at the core of any new changes, as the financial system looks poised to go through fundamental changes over the next decade.
- Finding safety in the US dollar
We start with something that had been seen in the past and continues to happen in 2020, which is a flight to the US dollar. As the global reserve currency, it continues to be a safety net for traders/investors during times of economic downturn. More than 60% of the money circulating globally is in dollars, and at the same time, there is a money market for the dollar outside of the United States, not just domestically.
Since all money is loaned into existence, the US and foreign entities (public or private) had been piling up on dollar-denominated debt, which in return had created a future demand for the dollar. Now that money markets are frozen, the debts must be paid leading to massive flows into the US dollar. Even though funding pressures had eased during the past weeks, all currencies are major underperformers against the dollar in 2020 and should continue to do so in the months ahead.
- Using trading protection features
With increased volatility and market uncertainty, traders must use trading protection features to limit their downside. Better execution technologies, enhanced negative balance protection, as well as volatility protection measures are just some of the tools that brokerage companies had been developing over the past few years.
Some companies had moved even further, wanting to stand apart from the competition by providing unique trading tools. This is the case with the online broker easyMarkets, which offers dealCancellation , allowing traders to undo losing trades for a small fee. According to one of the latest press releases, dealCancellation had been upgraded and now offers protection over a 1, 3, or 6 hour period, meaning traders will be able to take advantage of this benefit over longer periods.