Convert Losses Into Profits

Convert Losses into Profits

09/03/2023
15:59

The forex market is a large global market in which all currencies in the world are traded and is famous for its high liquidity and trading 24 hours a day, 5 days a week, but it is possible that some currencies in it will be exposed to sharp declines, collapses and even large losses, but the rest of the currencies will not be affected by these losses and it is possible If some of them witness a significant rise as a result, the collapse of prices in the forex market usually affects a specific currency, and not all currencies combined.

Which makes more profits, forex or stocks?

The forex market and the stock market are traded with different strategies and tools, and they are analyzed in different ways. The loss of a currency also differs from the loss of a company’s share. When a certain company’s share collapses and causes large losses, there is no compensation in return. This also applies to indices, for example the DJ30 index when it declines. It will often lead to sharp declines for all stocks of companies listed in this index, and this applies to all stock markets and other indices.

Quite the opposite of the forex market, it usually affects one currency such as the British pound or the US dollar, because of the forex deals that involve two currencies, for example the GBP/USD pair, that is, the British pound against the US dollar, which means that if the US dollar rises, it will decrease In exchange for the British pound At the same time, the same details apply to any of the other currencies that may be subject to a collapse, as the corresponding currencies will achieve strong gains at the same time as the value of this currency is eroded in the forex market.

What are the factors that cause a currency crash in the forex market?

A currency crash can happen when it loses value dramatically and suddenly against other currencies, and there are several possible reasons for a currency crash to occur, including:

Inflation: It is the first and biggest enemy of all countries, as an increase in monetary supplies in the economy leads to a devaluation of the currency. When the supply of currency in the market increases dramatically without increasing the demand for it, this leads to a significant decrease in its value. The value of the currency is great.
Economic decline: An economic slowdown or stagnation in the economy leads to a decline in the value of the currency. This can happen when spending decreases and investments decline in the economy, i.e., this case occurs when there is no growth in the economy but there is a rise in prices, which greatly affects the value of the currency.
Political unrest: Political unrest in countries can lead to currency devaluation and this can happen when the country loses political or economic stability.
Currency fluctuations: Negative movements in global markets can lead to currency devaluation and this can happen when investors lose confidence in the country and its currency and move to another currency that they consider safer.

The long-term collapse of currencies is often linked to the prevailing social and economic conditions in the country concerned, so it is important to follow the economic news and know the most important economic events that affect currency pairs, the most important of which are “interest rate, inflation rate, employment rate, purchasing managers’ index, consumer price index, GDP, FOMC” And you can follow the most important news and learn about the times of issuance of news that greatly affect market movements through the economic calendar provided by TNFX.

How do I avoid losses when the currency collapses?

We always advise to follow the proper risk management rules when trading in the forex market in order to avoid exposure to huge losses when the collapse of some currencies occurs, as it is an essential element in forex trading and it is better to understand this simple fact and make the required effort to master it, as it is one of the most important success factors in managing your deals or trades.

In order to be able to manage risks correctly, the size of the deal must be chosen wisely and accurately and commensurate with the deposited capital, and the approval of pending orders for all deals, as well as allocating more time to learn trading and analyze the market through “reading articles and books, watching videos, participating in educational programs organized by the company TNFX in and out of the country and elevate your experience.