Monday June 22, 2020 - 11:10:23 GMT
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Is FX trading superior to everything else during a bearish market?
Bearish markets sometimes become problems for investors. When the prices are declining during bear markets, trading with assets becomes problematic, and people are forced to sift through everything.
However, FX trading tends to be quite beneficial throughout the bear market. In this article, we will talk about the superiority of the Forex market in this period.
Quite often, investors in the Forex financial market are confronted with the concept of a bear market or hear statements such as: "all day the market was dominated mainly by bears".
A bear market is a situation when most of the Forex traders act to depreciate a particular currency. Considering the advantages and disadvantages of FX trading in general, as a rule, in bearish markets, it tends to be quite convenient. In this period, trading operations are executed only on one or several trading instruments.
The initiators of this trend are the "bears" - traders who are interested in lowering the value of a particular currency pair or another monetary asset. When the number of these trading participants begins to play a major role, then the market is called "bearish".
Usually, at such a moment, a stable downtrend develops on the exchange: the number of transactions for sale is growing steadily, which further contributes to lower asset prices.
Bears, playing for a fall, are eager to get more profit from previously concluded orders for the sale of a particular currency, because the more you manage to close a position at the lowest rate, the more benefit the trader will receive.
Usually, when it comes to FX trading during the bear market, a trader should definitely have a piece of considerable knowledge, to carefully assess everything. Basically, on the Internet, people can find various interesting information, ranging from expert opinions to full-on trading strategies. This is one of the reasons why Forex brokers usually provide this information freely on their websites, as it has the potential to convert these people into active traders. A perfect example would be Axiory's trading resources, as they check out in almost every characteristic. They’re all free, readily available on the website, and are written according to local financial regulations thus providing only objective information.
The strategy of working in a bear market is quite obvious. However, it still has some distinctive features of its own since it should be borne in mind that the current orientation cannot always continue and an uptrend will come sooner or later to replace it.
For this reason, when opening deals for sales in a bear market, it is necessary to determine how long this trend will dominate, and only after that place a new order.
No Bear market Problem
In the Forex market, there is no difference between buying and selling. Currencies are traded in pairs - each position includes the purchase of one currency and the simultaneous sale of another. So the concepts of a bull market and a bear market are very relative here. Thanks to this, traders can make significant profits both in an uptrend and a downtrend.
In contrast, only the uptrend (the "bullish" market) is considered the norm on the stock market, and the play on the downside is associated with significant risk and many technical problems.
In the Forex market, even in bearish trends, unlike other trading instruments, you can quickly make a profit - within a few hours, and sometimes even minutes. Forex trading is always in real-time. In our dynamic and full of crises time, long-term investments are not in fashion - they do not correspond to the modern lifestyle.
The high speed of the Forex market even in bear markets does not mean that there is more risk here than in other markets. On the contrary, the ability to carry out short-term speculation attracts many traders who provide high liquidity, which, combined with round-the-clock and lack of regulation, reduces the risk.
Adequate selection of tools
A sufficient number (several tens) of liquid currencies and crosses are available for trading on the Forex market. Each trader can choose to trade several fast or slow, the most suitable tools for him.
A small number of tools allows you to understand and use their mutual influence, even for an individual trader. In contrast, thousands of stocks are traded on exchanges - only specialized funds with many traders can work confidently here, each of which tracks a specific set of stocks.
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