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The Currency exchange market is worth an estimated $4 trillion – $5 trillion in daily trading volumes alone. It is the world’s premier market, with trading figures that dwarf equities markets the world over. Traders routinely speak of setting realistic goals and objectives vis-à-vis Currency exchange trading, but what do these look like, and how do you achieve them? Certain character traits are essential when it comes to FX trading activity. These include commitment to the cause, emotionless trading, and an insatiable appetite for FX trading knowledge.
The UK currency trading market is expected to undergo major adjustments as the Brexit saga comes to a head. Various multinational financial corporations are seeking to reestablish their headquarters abroad, in other European and US cities. This has a direct bearing on trading volumes taking place in the London metropolis, and impacts Currency exchange trading activity on a broad scale. Consider the following:
- Deutsche Bank indicated that it will likely move 4,000 jobs from the UK to other destinations in Europe.
- Lloyd’s of London will be based in Brussels, Belgium thanks to Article 50 of the Lisbon Treaty being triggered.
- Barclays Bank has opted for Dublin, Ireland as its capital after the Brexit is concluded.
- Goldman Sachs announced that it would relocate its employees from the UK after the Brexit. It would be moving its staff to New York, USA, and the bank is actively engaged in contingency planning with multiple departments to prevent a lockup of accounts, and a withering of clientele after the Brexit.
It is significant that these major banks and financial institutions are seeking ‘greener pastures’ outside of the UK post-Brexit. For starters, there is the issue of how international transactions will take place post-Brexit, and whether companies based in the UK will have the same access and be able to offer the same services to their European clientele. Rather than risking the loss of major markets, many of these international institutions are simply relocating abroad for strategic purposes.
What effect does the Brexit have on Currency exchange trading activity?
Any time there is increased volatility in the currency markets, there may be an increase in bullish or bearish sentiment. The GBP has been subject to significant bearish activity post-Brexit, particularly when it hit a 31-year low soon after the Brexit decision was announced. Today, the GBP/USD pair is positioned above the 1.40 handle and is holding its ground. Stability has returned to the UK financial markets, and sterling is likely to strengthen as the mood of Brexit negotiations remains positive. Initially, fears of a sharp depreciation of the GBP took root, and banks were concerned about lending rates across international borders. A degree of stability has returned, but volatility remains.
The global currency market must contend with the same concerns as always – these include technical and fundamental analysis. Technical analysis refers to the charts, graphs, trends and patterns that are evident with a currency trading activity. Fundamental analysis looks at the performance of the macro economy – the country in question. Of course, multiple other elements need to be factored into the equation such as interest rate differentials, trading times, economic news indicators and the like. All responsible currency traders plan their trades accordingly. They set stop loss limits to mitigate the effects of negative movements in the market and take profit orders when currencies hit a certain price point. These strategic ploys have always served FX traders well – regardless of the volatility the domestic market may be facing.
For newcomers to the currency trading arena in the UK, pre-or post-Brexit, it’s important to limit trading activity to a single currency pair. When that pair is understood, such as the GBP/EUR, or GBP/USD, it is possible to expand the range of financial instruments under consideration. Currency exchange diaries are important tools and resources that can be used to log trading activity, vis-à-vis entry points & exit points. Logs of profits and losses are equally important. As with many forms of speculative activity, it’s important to understand that losses accrue, and can be magnified when leverage is used. The win/loss ratio is less important than the nominal profits or losses that a trader racks up over time.
