First, the US government shutdown happened. Then the price of the dollar saw a brief spike, before tanking at an alarming rate. Now, America could be poised to grind to a halt once more, and forex traders everywhere are preparing to capitalize on potential market volatility.
Savvy forex traders were not surprised by the impact of the first US government shutdown in December 2018. There can be only one outcome for a nation’s currency when you announce to the world that your government is closed for business. For traders, to buy or to sell USD was not the question; they focused solely on how much they should invest and for how long. The volume of ‘Sell’ orders increased exponentially and generated profits day after day for over a month. Traders everywhere rode the stormy market sentiment, and what a ride it was.
When the price reversal finally happened 35 days later, ‘Sell’ positions were quickly closed. The dollar steadily strengthened and transitioned into a bullish phase. Recently, there has been speculation that a second US government shutdown is on the horizon. If it were to become a reality, we could see another USD price crash. As a forex trader, are you ready to capitalize?
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Hard times don’t necessarily have to be bad times. Ask yourself:
- Will there be another government shutdown?
- How will it affect 2019 USD prices?
- What can you do to capitalize on volatility?
You might not be personally driving the economy, but you are a passenger on the bus; being ready for bumpy conditions only seems sensible.
Will there be another government shutdown?
On January 25, Trump agreed to allow the federal government to resume normal operations for a period of three weeks. Federal agencies are up-and-running once more and USD is on the rise. Unfortunately, with the respite set to end on February 15, there are already signs that this positive sentiment may be short-lived. Yes, Trump agreed to sign a short-term spending agreement with Congress, but that deal will only keep the government running until mid-February. Trump was very vocal on what will happen if things don’t go his way, which has salted fresh wounds and stirred market fears.
“If we don’t get a fair deal from Congress, the government will shut down on February 15, again, or I will use the laws afforded to me by the Constitution and the United States to address this emergency.” President Donald Trump.
While Trump’s statement doesn’t constitute a guarantee of another government shutdown, such comments can affect market sentiment and should be taken seriously.
How will another government shutdown affect the forex market?
Firstly, even if Trump could reach a deal with Congress for a $5.7 billion border wall, a positive outcome for USD would be unlikely. While massive construction would create jobs, the nation would not reap the benefits in the near future, if at all.
On the flip side, another government shutdown could have a devastating effect on USD’s already fragile sentiment and cause yet another steep fall for the currency. But that doesn’t have to be bad news for you.
What can you do to capitalize on the volatility?
Weather forecasts and market forecasts are similar in many ways. Both can predict approaching storms, and both are open to a certain margin of error. The fact remains though that forecasts are right more often than they are wrong.
In the world of trading, if foresight were as exact as hindsight, we would all have acted on a myriad of profitable market forecasts. With the threat of a second government shutdown on February 15 firmly on the horizon, traders are now in a position to anticipate and act on USD trading opportunities. As happened in December, another government shutdown would likely provoke the price of USD to tumble. Such a drop would mean that a buy order would result in losses, and a sell order would yield profit.
Events like this don’t happen every week, so having a fully activated account and waiting for an opportune moment is wise. In today’s competitive times, being able to identify an opportunity and get ahead of a price curve is definitely a good start.
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Your 4-step guide to opening a trading account
Step 1: Getting registered
It's very easy to open an account with Exness. Click here to open the sign-up page in a new tab. If you want to get everything done in the next 10 minutes, be sure to have a credit card, ID, and, proof of address by your side. You can choose to open a demo account without these things. Either way, everything you need to know is here in this two-minute video. Pause the video as you go through the first three steps.
Tip: Account type depends on the amount you wish to deposit. Leverage is effectively an interest-free loan that the broker offers. It allows you to make a large investment from a small deposit. If you are looking for high profit with high risk, a higher leverage might be right for you. If you prefer slow-burning safety with lower results, then keep your leverage low. You can never lose more than you have, but higher leverage means faster results... both good and bad.
Step 2: Prove who you are
Exness takes security very seriously, and they check every client signing up. Just like opening a bank account, you'll need to prove who you are before getting access to the global markets. Watch this one-minute video to see how.
Tip: While you're waiting for your real account to be approved, open up a demo account and start getting to know the trading platform.
Step 3: how to get access to the market
Trades are made using the award-winning MT4 trading platform. Inside the box of the demo or real account, you'll see a gear cog. Click the gear cog to make a deposit. Use the passwords provided in the email. Click the gear cog again and select SIGN IN TO MT4 WEBTERMINAL then follow this one-minute video. You're about to make your first virtual trade on the real markets.
Step 4: making a trade
As a default, the top currency pair on the list will have an open chart. Right click on the chart and select the “close” option.
As a professional trader, selecting the right pair requires some research. For a first-time test, any pair will be sufficient. Drag a pair from the list of currencies on the left side of the trading terminal. The old saying goes, “what goes up, must come down.” Obviously, this principle goes the other way too. Your mission is to find a moment when the price direction is going to swing or reverse. If you feel the price is about to go up (bullish), then BUY, if it looks like it’s been trading high and the price has started a downward (bearish) trend, then SELL.
Open a trade
There are many ways to open your trade. You can select from the buy and sell options on the top left of the chart. Preferably, double-click the currency pair on the list. Right click on the chart when you’re ready to make your first trade. Time to set the volume depending on how confident you are in the direction you are forecasting. This is the perfect time to set your stop loss and take profit. Click the arrow to the right of the stop loss and take profit prices.
Note how the blue and dark red lines in the popup graph sit above and below the buy(ask) and sell(bid) price. In the example, we traded long (buy) and got a message confirming the order was successful. If you get an error, your volume was too high for your balance, or your stop loss/take profit was too close to the spread. Remember, every order starts as a negative because of the spread. Be patient. Your take profit will activate when the time is right, and your stop loss is protecting you. To close an order, you have three options. Click the X on the right or right-click the order. If you double click the order, you can close or modify the order.
You now know how to make a trade. Forex trading can be an exciting way to spend your free time, and you'll actually learn some real-world skills that will serve you well throughout your lifetime. Be patient, learn, and who knows, you might one day be one of the lucky few full-time traders. How will you spend your day?
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This article is a marketing communication and does not constitute investment advice or research. Its content represents the general views of our experts and does not consider individual readers’ personal circumstances, investment experience, or current financial situation.
This article is not prepared in accordance with legal requirements promoting independent investment research, and Exness is not subject to any prohibition on dealing before the release of the article. Readers should consider the possibility that they may incur losses. Therefore, Exness is not liable for any losses incurred due to the use of its articles. Please note that past performance of an asset is not a reliable indicator of future results.