FXTM information and reviews
OctaFX information and reviews
XM information and reviews
FXCC information and reviews
Libertex information and reviews
HFM information and reviews

Strategies to Trade Profitably During the Economic Crisis

Covid 19 and the global economic crisis that has evolved this year has created significant challenges for businesses and traders in every country. Additionally, millions of companies have had their sales, profits, payroll, and debt management affected severely.

Nationwide lockdowns, shortages of medical supplies and other important products, and interruptions in normal supply chain operations have many traders, both new and experienced, scrambling to adjust their trading strategies during the pandemic.

Making solid forecasts for opening positions, targeting which markets to focus on, and determining what news to believe and act on has all become extremely problematic during the crisis. Making matters worse is the threat of a “second wave” once many countries end their quarantines and try to return to normal.

Nobody wants to downplay the seriousness of the Covid 19 crises and the subsequent consequences. However, as traders we need to find a way to turn a bad situation into a profitable one in order to maintain our livelihoods and reach our financial goals. To that end, here are some strategies we have put together on ways to trade profitably by identifying which markets are being affected in regards to developments in the pandemic.

Filter Your News

News about the Coronavirus, Covid 19, and other related terms is not equal. We have all heard the term “fake news” enough in recent years to understand that not all information that we get is accurate. However, and more importantly, it is best to also understand that some news matters much more than others when it comes to trading during the pandemic.

While we might be interested locally in live advisories of the coronavirus in India, Russia, or whatever locale we live in, the stark reality is that markets don’t really care about most of these geos. The two most important areas to watch in regards to news are the United States and China with the EU, Japan, and South Korea a ways behind them.

Here are some sources that will definitely have an impact on markets when releasing information about the spread of the Covid 19 virus, mortality rates, concerns, and even optimism:

Pay Close Attention to Economic “Engines”

Economic “engines” form the support of general economic well-being. Experienced traders know this, which is why they monitor their Economic Calendars year round regardless of the Covid 19 issue. However, it is even more important to keep an eye on this small list of indicators to give you an edge in trading during the pandemic and as the world transitions back towards normality.

The Big 3 - Markets That Indicate Overall Sentiment

This bit of information is nothing new to experienced investors, but should be mentioned once again for anyone evaluating how to operate in the current market situation and will hopefully be useful. Brent Oil, Gold, and the S&P 500 — These three assets give the most insight into what is happening globally in the markets and how the big players (financial houses, mega funds, etc.) have evaluated current conditions.

Brent oil — We already explained that oil is the fuel of commerce and economic activity. Brent oil is the most commonly traded grade of oil worldwide. There are others including West Texas Intermediate (U.S.) and Urals grade (Russia), but Brent has the most global influence on markets.

If the price of Brent is increasing, it means that global demand for oil is increasing and therefore, economic activity is increasing. This affects nearly every company’s sales and profits. If that sounds huge and powerful, it’s because it is. This is why wars in the Middle East are a big deal to everyone.

Gold — When economic catastrophe strikes and countries see hyper-inflation, or even worse, war. The major investment players in the world buy gold. The reason is that gold is seen as a store of value and rightly so. Throughout thousands of years and various economic systems and governmental experiments, it has held its value.

If the ultra-wealthy are buying gold and the price is increasing, then it isn’t a good sign for things to come in the markets. Take a look at the gold chart starting from October of 2019 until now and you’ll see what we’re talking about.

S&P 500 — This index of U.S. stocks provides us traders with a window to the overall health of the mightiest corporations in the world. If you’re interested in seeing how investors view the health of the world economy, take a look at the S&P.

Because of the wide range of industries and sectors represented in the S&P, traders can get a solid understanding of how things are going and make better informed trading decisions. If huge investors see something happen with Covid 19, they will react and those reactions will show up in the S&P 500.

Move Forward and Trade with Confidence

To profit in the current market climate, traders need to monitor breaking news from the sources listed above, keep an eye on the mentioned economic engines, and understand how the “big” money is playing because they will already know about the first two factors.

We are optimistic that the global economy will recover from the Covid 19 pandemic quickly, but we need to be prepared to profit off of any further declines. Thankfully, trading allows us to generate a good income regardless of the market situation if we are diligent and prepared.


Share: Tweet this or Share on Facebook


Everything you need to know about Margin Trading
Everything you need to know about Margin Trading

How can you become more skilled in online CFD trading? The key is to possess as much knowledge as possible about anything that concerns the financial markets and the available trading tools and resources...

Best ETF Trading Strategies For Traders To Consider
Best ETF Trading Strategies For Traders To Consider

Exchange-traded Funds (ETFs) offer diversification, low cost and flexibility. They are also well-suited to a variety of trading strategies, ranging from basic to advanced...

Crypto trading strategies for cold coins this winter
Crypto trading strategies for cold coins this winter

In this article, we’ll explore three crypto trading strategies that are common to experienced crypto traders. None of them are a magic formula or bulletproof cryptocurrency investment strategy for all coins...

Should I invest aggressively?
Should I invest aggressively?

Wondering what market execution style you need to follow to get the profit you want? Continue reading today's article to learn more!

What Is Scalping Trading in Cryptocurrency?
What Is Scalping Trading in Cryptocurrency?

Scalp trading in crypto is a strategy that short-term traders employ to take advantage of trading opportunities. It is not a novice, but it can be profitable. The professional scalper...

Simple and Effective Exit Trading Strategies
Simple and Effective Exit Trading Strategies

Beginner traders hold a position to the last minute, trying to break even, close it prematurely and have a missed profit, skipping a good exit point. Do you want to minimize such situations?

Editors' Picks

FXCM information and reviews
ActivTrades information and reviews
RoboForex information and reviews
MultiBank Group information and reviews
MultiBank Group
FxPro information and reviews
Vantage information and reviews

© 2006-2022 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.