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Market volatility and how to handle it in forex trading
You’ll often hear it said that the forex market is the most liquid financial market in the world, and indeed, it is. Liquidity refers to how active a market is, which in Online Forex Trading, is determined by the number of active traders and the volumes they are trading. We discussed this at length in our article – “The Benefits of Online Forex Trading”. As financial centers around the world open and close throughout the day, liquidity fluctuates, having a direct and major effect on Market volatility. Periods of volatility are inevitable in any market, and forex is no exception, which can tend to frustrate new traders; for this reason, understanding market volatility in forex, as you begin to trade, is very necessary. You might see a currency pair’s price as high or low as it can get before buying or selling, but the very nature of volatility means that it could go up or down even further, and when you’re dealing with prices that change by the minute, timing is critical. In this article, we discuss the ways by which one can determine market volatility, as well as the five strategies that can be used both to preserve your capital, and hopefully profit from rising and falling market volatility. Market volatility, in simple terms, refers to the price fluctuations of assets. In Forex Trading, it refers to the frequency and extent of currency price changes- either up or down. When the price of a currency pair fluctuates rapidly, widely up or down, it is said to have high volatility. On the other hand, low volatility refers to relatively stable currency pair prices, with slow or small changes in value over time. It is therefore essential to take note of how volatile a currency pair is before entering a trade. Value fluctuation of assets over time is a normal feature of every market; be it stocks or currency pairs. However, often in Online Forex Trading, price fluctuations can become a lot wilder than usual, varying greatly from its mean position, as many Traders buy and sell at different prices. Market volatility in Forex Trading, as indicated above, is characterized by wide ranges in price, high volumes, and more trading in a particular direction. A deeper analysis of volatility – both Historical Volatility and Implied Volatility – using the most common market volatility formulae – Bollinger Bands; The VIX; Average True Range (ATR); Relative Strength Index (RSI); and established Support and Resistance Levels – further suggests that there is a higher probability of a falling market when volatility is high, while lower volatility is more common in rising markets. Experienced Traders who Invest in Forex Trading over the long term, know that given the interconnected nature of the online forex market, volatility can be experienced at any time; Smooth-Trending or Range-Bound Markets can be interrupted by sharp shocks and unwanted or unexpected periods of volatility. Warren Buffet is quoted as having once said “Look at market fluctuations (Volatility) as your friend, rather than your enemy”. There are numerous factors that cause volatility in markets; these include sudden announcements from Central Banks, Country-Specific Economic News, Company news, unexpected production/earning results, and general market sentiments. HOW TO HANDLE VOLATILITY IN FOREX TRADING 1- Educate Yourself and Get Knowledge of Market Sentiments The importance of Education in Forex can never be overemphasized. With Online Forex Trading, there’s ALWAYS room to improve on your knowledge. You need to do your research and constantly review your trades, both when it appears difficult and when trading seems easy. In one of our earlier blog posts- Why Education and Training in Online Trading is A Must Before Trading Forex – we discussed at length the importance of acquiring and mastering the skill set needed for online forex trading, and how to make use of Fundamental and Technical Analyses. It’s an essential skill to master and requires a Trader to look into Market Volatility News in forex, including the various releases put out by governments, central banks, and other major players of the Forex Market. To get a head start in the market, you should keep up with market volatility news and your forex calendar, and educate yourself on how the market responds before and after news releases. 2- Learn to Manage your Risk and Focus on Small Trades It’s of absolute necessity that you understand the risk involved with every trade you take. Knowing the potential returns on each trade by having a good idea of all the possible Entries and Exits, forces you to systemically visualize and compare your trades. As a Trader, you should constantly uphold certainty over risk; When market volatility is high, it is advised to reduce your leverage and position sizes. During volatile markets, you could also place smaller trades, thus committing less capital per trade. You can also repeat trades that work for you; picking one side to trade, and trading on that side until it stops working for you. Low volatility markets, in particular, may not offer the most ideal or most profitable trading conditions, as it’s not certain which direction the market is moving in. The best thing you could do in a low-volatility market is to consider taking a pause from trading until a clear direction is seen, or until you can determine clear Range-bound conditions to utilize your range-bound strategy. 3- Apply Volatility Risk Measures to Your Orders in Advance In one of our previous articles – Facts to Know About the Most Successful Traders in Africa– we talked about how important it is to use a Stop Loss, as this is an indication of the exact amount of risk you are willing to take on a trade even before you enter it. You can also consider using Long-Term Averages to reduce the chances of a price spike when volatility is high, instead of using Moving Averages to set levels. With low-volatility markets do not expect to make huge orders; Instead, focus on small order sizes with
Geldex Marks 1st Anniversary with Digital Finance Training for over 300 Tertiary Students
Geldex Invest, a multi-regulated broker entity, as part of its 1st anniversary commemoration, has embarked on a campaign to train over 300 undergraduates from selected universities in ‘Digital Finance’. The four selected universities to benefit from the initiative are the Koforidua Technical University, Valley View, Ghana Telecommunication University, and the University of Ghana, with some students already enjoying the hands-on training. Geldex believes that it is important the youth are included in decision-making and given appreciative opportunities for work, training, and to innovate. It intends to train these 300 undergraduates on the capital market, and the need to indulge and explore career and financial paths in forex trading. The capital market, especially the foreign exchange market, is the most liquid market on earth. Global Gross Domestic Product (GDP) of the forex market in 2019 amounted to roughly US$142trillion, with the entire worth of the market standing at US$2.4quadrillion, and with over 170 currencies being traded. This was reported by the Bank of International Settlement. The population of sub-Saharan Africa is projected to double by 2050, as indicated by the United Nations and currently, 60 percent of the population is under the age of 25, making Africa the world’s youngest continent. The burgeoning youth population is both an opportunity and a challenge for the continent. Internet, digital penetration, and engagements of African youth increased from 24.4 percent in 2018 to 90 percent in 2020 indicated by ITU Digital world (Child Online Protection Organisation). But most of the activities online by the youth are not very productive even though great career and financial opportunities abound online. Such a high number of young people is an opportunity for the continent’s growth, but only if these new generations are fully empowered and trained to realise their best potential. The United Nations estimates that 16 million young Africans are facing unemployment. On average, 11 million young people join the African labour market each year, yet the continent generates only 3.7 million jobs annually, a gap too wide to be ignored. It is to this effect that Geldex Invest, a multi-regulated broker, as part of its 1st commemoration is embarking on this Digital Finance programme for the youth. The International Market Analysis Research and Consulting (IMARC) group predicts a compound annual growth rate of six percent for the forex industry in the next five years. The industry is green in Africa, especially in Ghana – the more reason why there is need to study and train to bridge the educational and capacity gap in the hope of future opportunities. Geldex Invest has made its mark in the African Financial industry with its operations in this short time. The official sponsor of the African Financial Traders awards 2021, in collaboration with Women in Forex Ghana, under her initiative ‘The Elevate Ghana Forex Project’, has trained over 400 youths in forex education across four regions since the beginning of the year, 2022, and continues to impart financial literacy into the youth. The goal is to adequately equip the youth with the skill set that is relevant in this pandemic era for a better livelihood, gear the youth toward productive online engagements, and reduce cybercrime while helping government’s policy to reduce unemployment.
Choosing The Best Forex Broker To Trade With In Ghana And Africa
Spurred on by greater internet accessibility, more investment knowledge, and proliferation of forex brokers, online Forex trading has risen in popularity in recent years in Africa, with more and more traders emerging day-in-day-out. To trade the forex market online, choosing the best forex broker, and one you can trust, is a vital first step, as your broker will form a critical part of your trading equation, and essentially be your business partner. Online forex trading is gaining traction and momentum in Africa as a whole, and Ghana in particular, and the challenge many beginner traders are faced with, is finding a legitimate broker they can trust; one who is not only reliable but also within arm’s reach; as close and real as can be. Forex brokers are an integral part of the forex trading equation, and a trader’s aim should be to find the best forex broker available. If you’re new to forex trading, you may get confused by the flood of advertisements from different firms. That is why we have simplified it, helping you take the guesswork out of your search for the best forex broker to trade with. A forex broker is an entity that acts as an intermediary between institutional or individual clients and the global forex market. In addition, the forex broker’s job is to ensure your orders are executed. The forex broker market is saturated with many options, and it has become necessary to apply certain metrics in choosing the right forex broker to attend to your needs. Not all forex trading brokers are regulated, and it’s very important to be wary of unregulated firms, to avoid being scammed or your trading capital being done away with. Take your time to find a reliable forex broker to ensure your money and trades will be handled appropriately and to best industry practices. REGULATORY COMPLIANCE Simply, is the broker licensed and regulated by a reputable regulatory authority. As obvious as this may be, you will be surprised at how many unlicensed and unregulated forex brokers there are. The best forex brokers in Africa are licensed and regulated by industry regulators to grant professional and retail clients the ability to trade foreign currencies by offering them a secure online trading platform. Due to concerns regarding the integrity of a broker, and the safety of clients’ funds, accounts should be opened only with brokers who are duly licensed. Choosing a broker who is licensed to offer the services you need, helps you avoid potential scams, and reduces the risk of losing your money should the broker go bankrupt. Being a dominantly virtual industry, many people do not really know who they are dealing with, because everything is conducted digitally. You should evaluate a broker’s license and compliance with industry regulations, and not pay too much attention to glitzy websites. We advise you to stay away from forex brokerage firms that do not display their regulatory license numbers openly, as this may be a red flag. Many forex brokers these days also tend to show license numbers that are not theirs, hence, to be completely sure, you should visit the regulatory authority’s website to check if the said license number is true, and belongs to who they claim it belongs to. If you’re in Ghana or Africa, you can find a trustworthy broker licensed and regulated by either one of the following: CYSEC-Cyprus (As an EU member state, CySEC’s financial regulations and operations comply with the European MiFID financial harmonization law), the FSC-South Africa, ASIC-Australia, or the FCA-United Kingdom. Forex trading companies in Ghana are most likely to be regulated by any of these reputable industry regulators, any of which can render confidence that your broker is legit. As a globally recognized brand, regulated in the most advanced capital market jurisdictions across the globe, Geldex Invest is not only licensed, but also offers you the ultimate package of an excellent trading experience, and exceptional customer responsiveness. We are licensed and regulated by many of the leading financial regulatory authorities for international brokerage firms CHOICE OF DIFFERENT ACCOUNT TYPES It’s a plus when a broker offers you a variety of accounts to choose from for online forex trading. This means they can cater to traders with different financial abilities, needs, and aspirations. The best forex trading companies in Africa recognize the power of choice goes a long way. Closely related to the above, is the offer of Demo Accounts. Trading on a demo account is essential before trading on a live account. Trading on a demo account gives you the opportunity to trade in real conditions, but with virtual money. This means it’s absolutely risk-free. The main purpose of the Demo Account is to know the ins and outs of trading, put your strategy to the test, and discover your strengths and weaknesses before you go into a live account. We encourage beginners to trade on demo accounts for only so long; enough to get your feet wet and move to the live account. VARIETY OF TRADING INSTRUMENTS The more tradable instruments a broker offers, the more opportunities are unveiled for you. When choosing a forex broker, go with one that doesn’t only offer the major currency pairs, but also the Minors and Exotics, as well as precious metals and other commodities, for the purpose of diversifying your portfolio. Seeing as trading comes with risks, it’s important to manage them in an adequate manner. The best Forex Trading companies in Africa give you the opportunity to diversify your portfolio this way, so as to manage risk in the most effective manner possible. Gold, for instance over the years, has proven to be a very popular trading instrument during times of political and economic instability, such as is currently being experienced globally. If you find yourself in one of the largest gold-producing countries in the world and own a smartphone, you have no excuse not to learn to trade gold on the forex market. TRADING PLATFORM These include: More chart frames
Launching the ‘Charity Ball’
Women in Forex Ghana in partnership with Geldex Invest, Lolyfx and Blooming Trading Limited, has launched an ‘Elevate Ghana Charity Ball’ programme as part of its initiative to train over ten thousand (10,000) youths in digital finance by 2030 and to raise funds for other charity programmes. In the intervening time, the President of Women in Forex Trading Ghana, Ms Gifty Annor Sika Asantewah, disclosed that the training will introduce students across three selected tertiary institutions in the country to forex trade, equip them with the basic skills and develop their interest in the market which could serve as a part-time job for them while in school. Three public and private universities have been selected to benefit from the free forex trading (digital finance) programme this year under the Elevate Ghana Forex Project. The beneficiary universities include: the University of Ghana (UG), University of Cape Coast (UCC) and Valley View University (VVU). One thousand students (1,000) are expected to be trained in this year from these tertiary institutions and three other identified regions namely: Volta, Eastern and Northern. The Youths to Take Advantage of the Industry “The forex market is very liquid and is currently the most liquid financial sector in the world. Last year, it had $1.26 quadrillion revenue and in daily volumes it had $1.6 trillion. If the whole of Ghana decides to trade in the digital market, all things being equal, everyone will earn $2,000 daily. “This is how much liquid the trade is and it is an advantage for the unemployed graduates. Sometimes, people come into this space and because they want quick money, they do not learn the trade well and end up losing their money to fraudsters and then complain that digital finance is a scam.” – Ms Gifty Annor Sika Ms Gifty Annor Sika averred that Forex trading is extremely tough and needs great mental qualities such as patience, discipline, perseverance, to name a few to be consistently profitable. As such, she noted that the Elevate Ghana Forex Project will offer great trading tools that will help the participating youth to improve their trading knowledge to become better traders. As a result, she opined that “tertiary students are better positioned to comprehend the process and learn the trade faster, hence the decision to involve them.” The Forex guru explained that the participants will be taught to master over 3 emotions namely: Fear, Greed and Hope. She emphasized that these skills can only be mastered through years of experience trading in market for years in all conditions and learning from the experienced traders. She thus, indicated that experienced traders and experts will be engaged to train the participants. Ms Annor Asantewah noted that the proceeds from the programme will be donated to three charity organisations which consist of Maternal Right Ghana, Menarche Pad a Girl Project, and Coverme Worldwide. The Mayor of Capital Garden City of Belmopan Belize in Central America, Sheron Palacio, who was the guest of honour at the event, commended the organisers for supporting women empowerment.
Why consider forex trading as your next investment move
A hard reality of our current situation is that at the time of writing this article, if you did a dollar conversion of your salary in Ghana as of January 2022, it’s safe to say you’ve been hit with a 50% salary cut, if not more; and it won’t stop there. Troubled? You should be. If you’re reading this article, you’re most likely particularly interested in Online Forex Trading, or are simply like many looking for an alternative investment. As the world teeters on the brink of economic catastrophe, with economists anticipating another global economic recession a little over 10 years after we came out of one, institutional investors, businesses, households and everyday people are frantically searching for alternative investments. Forex investment has a lot to offer all kinds of traders, from beginners to professional traders; and in this article Geldex explores the five most compelling reasons why you must consider Online Forex Trading as your next investment move. Global Economic Hedge With Global economic activity experiencing a broad-based and sharper-than-expected slowdown, inflation has been higher than expected in the aftermath of lingering effects from the COVID-19 pandemic, Russia’s invasion of Ukraine, the rising cost of living, and tightening financial situations. These are all weighing heavily, especially in the face of global growth being projected to slow from 6.0% in 2021 to 2.7% in 2023 – a record low since 2001. This comes with attendant inflation – forecast to rise from 4.7% in 2021 to 8.8% by the end of 2022. The IMF has warned: “The worst is yet to come, and for many people 2023 will feel like a recession”. As Ghana engages in Debt Restructuring with the International Monetary Fund, government securities, including Treasury bills and bonds – previously regarded as an all-safe, risk-free investments – are most likely to lose a large aspect of that safety and protection from risk. Now more than ever, in the present economic situation Forex Investment has become an absolute necessity to guard against financial shocks, missing out on high-potential opportunities, and to hedge against inflation. The currency market allows you to invest in Forex by trading currencies based on how you perceive their relative values will change over a period of time. Depending on which direction you believe a particular currency is headed, you can speculate or project both ways; either long or short. After having gained enough experience, you can allocate your risk across the currencies of several countries; allowing you to profit from changing global macroeconomic conditions. A level playing field Online Forex Trading was previously reserved for multi-national corporations, banks, financial institutions, and very wealthy investors. With prevalence of the Internet and technological advancements, Forex trading companies and proprietary currency trading platforms, this investment opportunity is now open to everyone willing to invest. The same technologies that have made online forex trading possible are the same ones that have made information freely available. In addition, unlike other capital markets, the news that drives currency prices is available to everyone on a real-time basis. Unlike stocks, bonds and even commodities which can many times be influenced by proprietary information held by insiders and key stakeholders of those assets, control of the currency market is much less centralized – and thus far less influenced by insider information, if ever. This aspect of online forex trading makes it one of the most transparent markets for trading. Knowledge is indeed power, and today’s information technology provides it in abundance. The speed at which technological advancements have ensured news travels across the globe means that someone investing in Forex can monitor their open positions from anywhere on the globe, and can react just as swiftly as a professional trading from the very centre of it in New York, London or Tokyo. Resources previously available only to large financial institutions are now open to all who may be interested in Forex investment. This means you can do your own analysis of events that influence a country’s economic health and actual monetary flow, which are the elements driving and impacting currency valuations. Thus, the online forex trading market cannot be controlled by one person or a few individuals and institutions. Considering how incredibly complex the online forex market can be, coupled with the myriad of influences (both macro and micro) they are subject to, everyday people investing in Forex are now better-positioned than they have ever been to take advantage of information and use it to manage their capital profitably. Volatility In simple terms, volatility refers to the price fluctuations of assets. It measures the difference between the opening and closing prices over a period of time. When looking to invest, many people tend to gravitate toward more stable options – such as the Real estate market, which is largely viewed as a solid investment market. But who says volatility has to be a bad thing? In actual fact, when a market moves frequently it creates an avenue for many opportunities to make strong gains within a relatively short period of time. Warren Buffet was once quoted as saying: “Look at market fluctuations (volatility) as a friend, rather than an enemy”. The volatility of currencies is influenced by a number of factors, including but not limited to: The economic stability of a particular country Global economic happenings as a whole Political news, events and policies (e.g., interest rate fluctuations, currency revaluations, political upheavals, trading sanctions, monetary policy changes, trade deficits, tax changes, import restrictions, etc.) Trade deals, etc. On any given day, Forex markets can move between 50-100 pips on a major currency pairing, allowing investors to cash-in on poor-performing assets or seize upon potential opportunities that present themselves. Regulation Forex Market regulations refer to the rules, laws and guidelines that Forex Trading Companies or brokers operating within the Online FX Trading space must abide by. They extend to the continuous oversight and enforcement of these rules. Forex Investment is well regulated by several bodies across the globe – including CYSEC (Cyprus Securities and
