Is forex an option during crisis?

Foreign exchange or Forex market refers to the trading of global currencies. As we know that anything can end in failure if it is done without proper knowledge and training. This holds true for forex also. Initially people don’t bother to undergo any training for forex and later they think that forex is really complicated and difficult to understand and they step back thinking it is not their cup of tea. But in reality with just basic knowledge, it can turn into a trade that is free-for-all.

Now in the time of slowdown and recession, when even experienced traders have got their fingers burnt by losing around 70% of their investments in the stock market, is it a wise act to get into forex trading? The answer is yes! This is really unexpected but true. Let us now try to go to the bottom of this to find what makes Forex a good option even during crisis.

Forex basically deals with the trading of one currency against other. So it is clear now that it is not influenced by a single country, economy or industry unlike stock markets but it is truly a global thing. As mentioned earlier, in forex, we trade one currency against other. So the relation can be easily understood that if one currency drops in value, other automatically rises. But for the detailed analysis, let us now understand the terms Support and Resistance which are closely related to the dropping and rising of currency values.

‘Support’ is referred to as the bottom price levels that currency pair touches. It is also known as ‘floor level’ of the currency pair value. It marks the end point below which a pair cannot fall. Similarly ‘Resistance’ is the upper level touched by the currency pair. It is also called ‘ceiling level’. So now we can very well understand that if we are aware of the floor and ceiling levels of the particular currency pair, we can easily judge the next move because the currency values oscillate between these two. For e.g.  If the currency level is at the floor level, we can easily judge that the next currency value will be towards the ceiling.

Now let us discuss how these resistance and support values are related to crisis. During crisis, the value of one currency falls below the expected value and value of other currency increases unexpectedly. So the resistance and support values get changed during crisis. Support value falls even below the bottom line and resistance value rises above the ceiling. So the only thing we have to keep in mind during crisis is the changed values of these two factors to get profits even in the global slowdown. Moreover the Forex markets are not affected by the economical changes in a single country. So if you are not dealing with that particular country’s currency, you don’t have to worry at all.

Unlike stock markets, forex markets are open 24 hours a day. So the chances to extract the profit are more if you have missed one.  Moreover, as forex markets follow a particular trend, so there are number of programmed autopilot robots available in the market which can work with almost 90% efficiency if you have a proper knowledge about their usage.