Tag: COVID-19

Investing & Trading During COVID-19

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Investing & Trading During COVID-19

The sad thing is that although things like this have happened before, none of us were prepared for the COVID-19 outbreak. COVID-19 managed to ravage the world in a matter of mere weeks, and a large part of this has to do with the economy. Of course, the health and wellbeing of millions of people worldwide has been affected in a negative way. However, poor health is not the only effect of the COVID-19 pandemic.

Worldwide, economies have virtually collapsed, especially in particular sectors such as hospitality, travel and tourism, gambling, and so many other sectors too. For all of you traders and investors out there, whether you trade Forex or invest in the stock market, this COVID-19 fueled worldwide economic meltdown has had serious consequences. For example, the USA unemployment rate is at a record high, with conditions not having been this severe since the 2008 economic crisis.

The trading and investing landscape have changed quite a bit since the pandemic started. If you are a stock investor or Forex trader, chances are that you have been hit pretty hard and suffered some losses.

However, this is not to say that it is not possible for traders and investors to come out of the COVID-19 pandemic unscathed, and even with some profits too. Today, we are here to provide you with some crucial tips on investing and trading during COVID-19. With these tips, not only can you save yourself from going belly-up, but you might just increase your capital holdings too.

Keep Diversification in Mind

Something that has spelled doom for so many traders and investors, due to this COVID-19 pandemic, is having all of their money tied up in a single or just a few market sectors. Folks, this is something that you should have already been doing, but now at this time, diversifying your investments and trades is more important than ever.

In other words, don’t put all of your eggs in the same basket, because if one market sector crashes due to the effects of the pandemic, you will lose all of your money.

It’s a good idea to diversify, to invest some money in various Forex currency pairs, to invest in some commodities, some stocks, and in government bonds too. This way, if one of your trades or investments tanks, you still have many others to make up for the losses.

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Using the Right Trading and Investment Services During COVID-19

If you are an avid Forex trader, chances are that you are using a high quality broker. If you are a stock investor, you probably have a broker doing most of the work for you. The point here is that high quality brokerages cost a lot of money, particularly in terms of trading and investing commissions.

Now, we are not saying that you should kick your broker to the curb, but that said, you do need to evaluate how well the broker is performing for you in comparison to the fees you are paying. If the fees alone are eating up most of the profits that you could have made, then it might be time to change things up. Using low commission brokers can go a long way in saving you money during this uncertain time brought on by the COVID-19 pandemic.

Educate Yourself on the Impact of COVID-19

Something that you definitely need to do, more now than ever, is to monitor the markets, economies, and individual industries. Of course, the way in which you trade and invest money depends on market conditions.

Well, COVID-19 has destroyed many sectors, with hospitality being one such example. Moreover, some national currencies are weathering the storm very well, while others have been decimated. Therefore, in order for you to weather the storm, and maybe even to make a profit, you need to educate yourself on exactly how COVID-19 is affecting various industries, markets, and currencies.

With the right analysis tools, you can predict the trends in various market sectors to make more informed trading and investment decisions. Make no mistake about it, COVID-19 has had a massive impact on the finance sector and on economies in general.  

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Decrease Your Risk

One of the biggest tips that you can follow about investing and trading during this COVID-19 pandemic is to decrease your risk. Now, here we are talking specifically about trading. If you were trading with 5% of your capital per trade before the pandemic, now you should be trading with 1% or 2% of your capital per trade at most.

The fact of the matter is that you absolutely cannot be trading with money that you cannot afford to lose.

Moreover, trading might need to take a little backseat at this time. COVID-19 has seen many people lose their livelihoods. Therefore, it might be a good idea to put a portion of your money into a savings account and to keep it for a rainy day. Having all of your money tied up in trades and investments during this time is not recommended.

Focus on High Demand Areas

Another good tip that we can give you for trading and investing during COVID-19 is to focus on high demand markets. Sure, some market sectors have crumbled due to COVID-19, but there are others which are still in high demand.

For instance, the medical industry is booming, oil is always a good investment, and there are various national currencies which are seen as safe haven currencies. If you want to make money, you need to invest into market areas which are still seeing a high demand. Remember folks, pandemic or not, the law of supply and demand still holds true.

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Investing During COVID-19 – Final Thoughts

The bottom line is that during the COVID-19 pandemic, you do really need to rethink the way you trade and invest. If you follow the tips we have outlined today, you might just be able to come out of this pandemic in better shape than when it all began.

 

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Coronavirus Trading Risk Management

Fabian FabianLatest News / Latest News / NewsLeave a comment

Coronavirus Trading Risk Management

The world market has seen an unprecedented downturn over the last few months, all because of the coronavirus. Stock markets, commodities, and currencies alike have all been drastically affected by the coronavirus pandemic. Many people are panicking as they watch their investments tank, but people, panic is not the right way to approach this situation.

Although the coronavirus is certainly not a boon to traders and investors, just because things don’t look so good right now does not mean that you cannot make money. If you invest and trade the right way, you follow certain rules, and you allow your mind to do the work, instead of your emotions, you could walk away from the coronavirus pandemic in relatively good condition.

A lot of this has to do with risk management. If you manage to efficiently control risk while trading and investing during this coronavirus pandemic, you could make some decent profits. Right now, we want to cover some essential coronavirus trading risk management tips to keep your finances relatively safe. Here we have some great tips and strategies on how to preserve your capital and come out the other side of this coronavirus pandemic unscathed.

Coronavirus Risk Management

Decrease Lot Sizes & Investment Amounts

Something that you need to know when it comes to trading during the coronavirus pandemic is that you should decrease your overall level of risk. If you were investing 5% of your total per trade before the coronavirus pandemic, at this time, you might want to decrease this amount. Most people would recommend trading with no more than 1% to 2% of your total capital per trade.

This way, you will still have the opportunity to make a profit, but if a trade goes south, you won’t lose a huge amount of money. Simply put, due to volatility and uncertainty, you should decrease the amount of money you risk per trade, and in other words, never trade with more money than you can comfortably afford to lose.

 

Close Your Trades Over Night

Something else that you should do for proper risk management during the coronavirus pandemic is to close your positions overnight. Of course, this does not apply to your stocks and commodities investments, but it is very important for Forex traders.

The market is so volatile right now, that if you keep Forex positions open during the night, you may wake up in the morning to find that your trades have tanked. Therefore, sticking to short term trades and closing your positions at the end of each day before you head off to bed is a good idea.

 

Pay Attention to Safe Haven Currencies & Assets

When it comes to trading and investing risk management during this coronavirus pandemic, another good idea is to pay attention to safe haven currencies and safe haven assets. In terms of currencies, the United States Dollar, the Swiss Franc, and the Japanese Yen are all considered safe haven currencies.

There are currencies people flock to during times of economic turmoil. Therefore, paying close attention to these is vital for successful Forex trading. Also, pay attention to defensive stocks and gold as well, as both are considered safe havens. A good idea may be to also invest in safe government bonds.

 

Take Advantage of Short Positions

In terms of coronavirus risk management for trading, in order to still make money even in markets with strong bearish trends, taking advantage of short positions is crucial. Of course, when you open a short position, it means that you expect the price of something to go down. This is a good way to trade in a bearish or downward trending market. Remember, prices don’t have to go up for you to make money.

 

Remember the Laws of Supply & Demand

Yet another coronavirus risk management tip to follow is that you should always pay attention to the laws of supply and demand. In other words, in times like this, there are certain products and currencies that decrease in demand.

For instance, many commodities have decreased in price due to low demand, something that can definitely be said for the hospitality industry. The point here is that there are certain assets and securities which rise in demand in times like this, and others which decrease in demand. The higher the demand compared to the supply, the higher the price will be.

Coronavirus Risk Management

Stop Panicking & Start Thinking

Perhaps the worst thing that you could do while trading and investing during this coronavirus pandemic is to panic. This applies particularly to panic selling. As the coronavirus hit, people began panic sell mass amounts of stocks and commodities, which caused prices to tank.

Well, the market functions in a cyclical fashion, which means that even if it moves down for a long time, eventually it should recover and bounce back.

Sure, selling assets that are predicted to tank and to never recover is one thing, but selling off all of your assets that may very well bounce back and become stronger than ever is very short sighted. Remember, as an investor, you need to focus on long term goals, not the short term.

 

Diversify Your Investment & Trading Portfolio

Yet another risk management strategy for this COVID-19 pandemic to put to use is portfolio diversification. The fact is that if you put all of your eggs in one basket, and that basket breaks, you lose all of your eggs. So instead of just investing in one thing, invest in and trade multiple asset types. This way, if one fails, you still have the others to fall back on.

Coronavirus Risk Management

 

Use Stop Loss & Take Profit Orders Properly

Using stop loss and take profit orders properly is also another good way to manage risk during this uncertain time. Using trailing stop losses is going to be one of your best weapons to prevent excessive losses in this super volatile time.

 

Coronavirus Trading & Investing Risk Management

There you have it folks, some really good risk management tips for trading and investing during this tough time of the coronavirus pandemic.

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