Highlights from the previous week: Australia Reserve Bank (AUD) maintained their Interest Rates at the current rate of 0.25% as per expectation and the board maintained that they will not be increasing the cash rate targets until progress is being made towards full employment. Also their trade balance reached 10.60B vs 6.40B expected. This was good for AUD because it simply means that more goods and services were exported than imported.
Bank Of England (BOE) also maintained their Interest Rates at the current rate of 0.10%. The board felt that the current rate is appropriate but they will monitor closely and act accordingly. In the U.S, as expected, the jobless claims were higher, this is the case with most countries due to Covid-19, the labour market is affected badly and there are more unemployment insurances claims. To close off the week, there was Non-farm payrolls release which printed the lowest numbers with the improved earnings. April job stats were really shocking. But again, due to Covid-19 most countries are reporting crazy stats. Below is our weekly economic calendar. Feel free to subscribe to receive weekly economic news straight to your email or App which is available on Google Play store (see download link on the home page). Thank you for stopping by. Kindly share with anyone who is interested in learning more about the markets.
Is there a difference between stock market and Forex market?
Before I get into the U.S markets, I thought I should start by answering the question above. Yes, there is a difference between those two.
What is stock index trading?
Stock index trading is when you are trading a basket of stocks which makes up an Index. You can do that on your Forex trading platform and do it through an instrument.
Advantages of trading stock indices
Stock indices have generally higher returns than the stock market they represent.
The Volatility is reduced as compared to currencies.
Stock index trading requires less research as opposed to trading /investing in individual stocks.
When trading a stock index e.g. Nasdaq, you do not have to spend weeks analyzing all the companies under this umbrella but all you can do is just follow the instrument as you would do analyzing your currencies.
Stock index trading does not require any traditional stock brokerage where you pay high fees, you can buy and sell on the same Forex trading platform as you would do with your currencies and it is cheaper.
There are different markets that one can focus on. In this post I will only focus on U.S markets and share a few stock Indices that you can choose from. I will do other markets as well in a different post.
U.S markets
1.Nasdaq
Sector: Technology. Nasdaq stands for National Association of Securities Dealers Automated Quotation. Nasdaq comprises of 100 companies listed on the stock exchange in the United States. This is one of the popular one’s amongst traders.
2. Dow Jones
Sector: Industrial. Dow Jones also known as the DOW, is the stock index that measures the stock performance of 30 large companies listed on the stock market in the United States.
3. S&P 500
Sector: Financial. The S&P 500 index measures the stock performances of 500 large companies that are listed on the stock exchange in the United States. The S&P market cap is 70 to 80% of the total US stock market capitalisation. It is a commonly used benchmark for stock portfolio performance in America and abroad.
What economic indicators affect these 3 Indices
The method of trading that I personally use, focuses more on fundamental analysis. Fundamental analysis is all about understanding the reasons why certain things happen in the markets. Economic data releases such as Consumer Price Index (CPI), employment data, GDP, trade wars and the Interest Rates are some of the key indicators in trading these indices. I cannot share these in detail over a blog post but I hope you have learned a thing or two about stock Indices. Thank you so much for stopping by and reading this post. kindly share with anyone who maybe in need of this content. Your shares are always appreciated.
Planning is key. With everything that is happening in the markets, the best thing that one can do as a trader is to know which currencies to focus on for the upcoming week. Even though there are lots of breaking news and geopolitics, knowing what is expected from the economic calendar is a good start.
This week we will have 2 Central Banks in focus. Reserve Bank of Australia (RBA) and Bank Of England (BOE) will hold their Monetary Policy meeting to decide on their Interest Rates. BOE is expected to maintain theirs at the current Rate of 0.10% and RBA to also maintain at the current Rate of 0.25%.
This week is also non-farm payrolls week. The United States will be releasing their 5th Job statistics which exclude the farming industry hence it is called non-farm payrolls. Due to COVID-19 and a lock-down, job stats are expected to be at its lowest. Below is our weekly calendar.
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I had to publish this blog post as soon as possible. Welcome back, if you aren’t subscribed yet, please feel free to do so. Check on the sidebar for a subscribe button, enter your email address, click subscribe, check your email for a confirmation link (which may be in spam/junk folder). Click on the link to confirm your subscription and you’ll be get all new publications delivered to your email. You can also download the app which is now available on Google Play Store. Back to the business of today, which is about COVID-19 Forex scams that are on the rise.
Due to the COVID-19 pandemic, all Central banks are resorting to cutting their Interest Rates to save their economies, most people are desperately in need of investments that can pay better returns. The drop in Interest Rates means less Returns On Investments (ROI) and less Interest on loans. Basically, lower Interest Rates makes borrowing more attractive and saving & investing less attractive. You can read more about how COVID-19 has affected the global markets on my latest blog post here. For that reason, scammers are having a field day targeting unsuspecting investors to invest in fake investment scams hidden under the Forex umbrella. The fraudsters are having it easy because when people hear the word Forex, they think of making quick buck or easy money (and that it is not the case at all).
Your smart phone is your ATM
The statement above has caused so many people to fall for anything that promises them high returns with just little effort . During this period of lock down, most people are bored, scared and panicking about the possibilities of loosing their jobs or being unable to save their small businesses after lock down. Most people are on their cell phones most of the time trying to find opportunities to make money online. Don’t be a victim, if it sounds too good to be true, it probably is, even during COVID-19. Don’t be fooled into believing that one only needs a smart phone to make money through Forex, there’s a lot of learning that needs to happen before one can make some money. I can also assure you that it won’t happen over night.
Be very cautious of cold calls
I have been getting a lot of questions regarding Forex investments where someone calls, sms’es or WhatsApps to present an “Investment” opportunity which promises incredibly high returns on a weekly or monthly basis. Some are even promising to double your investment in a week. The more you invest, the more money you make. Be very careful to never fill in any forms or agree to any verbal contract over the phone. I also get a lot of requests from people who are asking if I can trade for them (I don’t trade public funds, only my account). This has shown me that the level of desperation is very high and has inspired this blog post.
Be very scared if you are suddenly being head hunted by social media” fund managers”, you are likely to become a victim. I know for sure that I cannot guarantee the returns for myself even after so many years of trading the markets, I cannot imagine someone trying to promise hundreds of investors guaranteed profits, in most cases, those are just pyramid schemes hiding under the Forex umbrella. There’s a high possibility that NO funds ever end in a trading account, they just rotate money, paying new investors with old investors money until they run out of new investors which is when they collapse leaving many people bankrupt. DO NOT be a victim!
Investment websites
They make is so easy to fund and give you access to some dashboard where you can monitor your investment. Most of them pay you for recruiting more people and they usually have a very short lifespan. With the global Interest Rates drop, scammers are out here to use this opportunity to scam more people. Stay safe, stay at home, wash your hands regularly and also stay ALERT. DO NOT be a victim!
Thank you for stopping by and reading this post, please kindly share with anyone who might need this content, you might save someone from being scammed. I am not a financial adviser, I only share my experiences through this blog. For financial advise, kindly contact a professional.
After such a long time of not posting any content, I finally found an opportunity to do so. To the subscribers, welcome back. If you just stumbled upon this blog, welcome and feel free to click on the subscribe button on the sidebar and enter your email address to subscribe for new publications to be delivered to your email every time there’s a new blog post . You will receive an email with a confirmation link, click on it and confirm subscription. Please note that the email may be in spam/junk folder.
The world is faced with the global pandemic called Covid-19 also known as corona virus. This pandemic has disrupted the world’s economies and created huge volatility in the markets which can be very dangerous to most traders but can also bring trading opportunities to some traders who are able to keep up with all the breaking news. In this post, I am going to share how the virus has impacted the Forex markets. Most traders still believe that trading Forex is just about a smart phone and reading through some lines (which is far from that, we will discuss this some other time)
Central Banks During Covid-19
The impact of corona virus has called for Central Banks to re-look their Interest Rates to save their economies. Over the past few weeks, Federal Reserve Bank, Bank of Canada and other Central Banks had to call for an emergency Rate Cut meeting. To understand why such a move, you have to understand the advantages of having lower Interest Rates. I will list them out below.
1: What is the role and function of a Central Bank?
To set official bank rates used to manage inflation and exchange rates
To issue a country’s currency
To set targets and monitor economic data while they implement special tools.
2: Why would a Central Bank opt for lower interest rates?
To encourage borrowing : When the Interest Rates of a country is cut, it also means that the people who are borrowing from the banks will be paying less Interest on their loans. That will then encourage consumers and even big companies to borrow for spending and bigger investments.
To make saving less attractive: When the return on savings are lower, most people would opt for spending money than holding on to it.
To weaken the currency: When the currency is weak, the country’s exports become more competitive and their imports more expensive which also encourages consumers to buy local because of the exchange rates.
To lower Mortgage loans: When mortgage loans holders pay less interest on their existing loans, they may be left with more money and that should increase consumer spending in the country.
3: Oil Prices
The oil industry is also greatly affected by Covid-19. When the pandemic started to spread, oil was already under a lot of pressure due the price war. Goods are not moving due to the lock-down in most countries. As a result, there’s less demand of oil. Even when OPEC agreed on cutting supply, it didn’t help much with the price because there’s less demand. To learn more about OPEC and what happens to oil prices when they cut supply, or when there’s over supply, you can read this POST. Travel and tourism is largely affected. Jet fuel is not being used because international flights are halted as well as domestic ones. There is definitely an oversupply of oil which makes oil prices to remain low.
How to take advantage of the current situation in the markets?
The first thing that you need to do is to stay away from anyone who claims to be predicting the markets and knowing exactly what’s gonna happen next, avoid such people. Stay updated with business news, breaking news and follow the Central Banks and key economic indicators. During this time of crisis, the key economic indicators such as employment change, unemployment rates and so forth, may also be inaccurate because some surveys collect such data on a door-to-door basis, which is impossible to access homes during lock down.
If you have been trading but you have never cared or were never interested in what really moves the markets, now is the time to learn. As long as you have invested your money in Foreign Exchange, you will be affected by economic crisis (whether you choose to believe in it or not). Just like when it is winter, it affects all of us whether we believe in winter or not. I know a lot of traders started to pay attention when Brexit happened in 2016. Should you wish to learn more about the markets other than just reading charts, feel free to contact me for private coaching. You can also use the WhatsApp feature on the sidebar for instant chat.
Thank you so much for stopping by and reading this post. To help more individuals access this information, kindly share with your peers and stay tuned for more information, weekly economic news and practical tips that you can use to improve your trading. Please live a comment below and tell me if you like the new look. I am in love with this new home, a big shout out to my designer for a job well done and a fresh look.
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