The foreign exchange market is one of the most active and important parts of the world economy. It is also a very popular investment tool among both professionals and regular people. There are two main trends on the world’s foreign exchange markets. The first is that market participants are getting smarter and smarter over time. The second is a level of instability that has never been seen before. Both of these are real and will continue. The main question is how long they will be a part of forex trading, or if there will be a time of change like when the Internet economy grew during the dot-com bubble more than a decade ago. Read on to find out more about these trends and what they might mean, especially for forex traders.
Forex Trading Is Getting More Difficult
As per a well-respected MetaTrader 4 specialist, one of the world’s largest investment and reference houses came to the conclusion that trading algorithms and other advanced computer tools are making the forex industry more complex. The report found that computers and robots were used to record less than 10% of all trades in the late 1990s. By 2004, the number was at 70%, and by 2008, it was at 91%.
The Forex Markets Fall
Investors all over the world were quickly thrown off by the start of the 2008 economic crisis. Many people thought the markets were pretty safe, and as a result, they lost a lot of money. People who lived in countries like India and Brazil, where the economy was still growing quickly, couldn’t say the same. Then, things got very bad for investors in Italy, Germany, and other key European countries. They all lost a lot of money and suffered losses on a large scale as they headed toward being called sovereign debt defaults.
The Forex Markets Again Go Up
As the economy started to get better, investors started looking for safe places to put their money again. Forex assets became popular, and many people bet that the prices of forex assets would go up a lot in the near future. This optimism was not misplaced, since the foreign currency trading sector is where most Forex trading takes place. This sector is very volatile, which means it is also very sensitive to changes in the economy or finance. According to a MetaTrader 4 professional, the forex market’s stability has made it a good place to invest for many people, even those who aren’t professionals. Even when the economy is doing well, investors who use Forex as a trading tool can still make money.
The Forex Market Is Getting More Volatile
When the economy gets better and investors want to add safe assets back to their portfolios, Forex assets will once again be appealing. But this time, the Forex assets of the world’s biggest countries will be competing for the attention of investors. The more advanced financial systems that are becoming more common around the world will have made Forex trading more volatile, with more risk-on trades and risk-off trades that include more volatile assets like stocks. When investors are less willing to take risks, they may be more interested in Forex assets with higher potential returns. This will only make Forex trading more popular overall.
The Internet Shakes Up the World Economy
A Hong Kong-based investment consultant named Swat Nan said in a recent report that the Internet and digital media will change the way people invest in a very big way. In particular, Nan thought that as the internet economy grows, the importance of being close to investment assets will go down.