The last two years have seen currency-trading volumes soar, peaking at an estimated $4.8 trillion each day. While this underlines the popularity of the market, it barely scratches the surface in terms of the challenges facing those who hope to succeed in this sector.
After all, not only is Forex trading margin-based and extremely volatile, but it is also susceptible to a number of external, economic trends that have a direct impact on what you earn from your trades.
3 Factors that will impact on the success of your Forex Trades
These economic trends are also exacerbated by other factors, which may be central to your personality and unique trading strategy.
With this in mind, here are three of the primary trends that impact on your Forex trades as an individual:
1. The time that you invest into Trading and the real-time nature of the market
A recent study suggested that there was a tipping point in terms of salary when it comes to achieving the ideal work-life balance, with individuals who earned more than £37,000 per annum more likely to sacrifice free time and suffer from stress and anxiety over time.
This is a huge consideration for part-time traders who have an existing source of income, as it can be difficult to invest time into the endeavor without compromising your personal life.
The real-time, 24-hour nature of the market only exacerbates this issue, so it is important that you create a strategy and portfolio that allows you to make the most of your time and cultivate a professional and recreational balance.
2. Macroeconomics and Capital Markets
Interestingly, the Forex market is primarily driven by a number of macroeconomic factors that influence the decisions of traders and real-time price movements.
The individual health of each nation’s economy is integral to determining the value of its currency, meaning that capital market performance, key data releases and interest rate fluctuations will all have an impact on the value of trades.
You must strive to understand this relationship, as otherwise your portfolio could be ambushed by external economic factors that sit outside of your control.
This explains why partnering with a reputable online broker is such an important consideration, as service providers like ETX Capital provide in-depth market analysis in response to breaking news and data releases.
3. Geopolitical relations and conflicts
While a nations’ economy is influential in determining trends within the Forex market, it is also important to consider the role of geopolitical conflict and tensions.
Such issues have a huge impact on fluctuations within the Forex market, particularly in terms of the perceived value of individual currencies. This is why Forex traders consistently monitor breaking political news, while often tailoring their strategy to adapt to real-time trends.
It is even more important in the current political climate, where terrorism and civil conflicts are creating greater volatility and uncertainty.