Housing Market Crash: How to Safely Trade Forex

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Facing the Reality of the Housing Market Crash

It’s an undeniable fact that economic downturns can devastate any number of industries through decreased investments, aggregated losses in revenue, and a decrease in consumer confidence. This is especially true now, as the effects of the global housing market crash are being felt by many. Forex trading has been an effective tool for both investors and speculators to take advantage of these market conditions. It can be intimidating to take on the risk associated with currency speculation, but by understanding the strategies, fundamentals and potential pitfalls associated with forex trading, it’s possible to develop a disciplined approach to navigating the volatile markets.

Understanding Risks associated with Forex Trading

One of the biggest questions that traders may have when they first start is how much risk they can afford to take on. As a trader, it’s important to remember that risk management should be determined by each individual’s financial situation and goals, as trading risk is the potential for future loss. It’s important to realize that most investments have no guarantee of profit, and that forex trading carries much more potential risk than more conventional investments like stocks and bonds. This is because of the constantly fluctuating currency exchange rates, and the high levels of leverage that can be obtained with forex trading.

Removing Luck from Forex Trading

The truth is that luck rarely plays a significant role in forex trading. Due to the quick movement of the market, traders must rely on solid strategies, fundamental analysis, and technical indicators to predict the direction of currency pairs. As with any form of trading, it’s important to have a solid plan in place when taking trades. This will help to minimize losses and maximize profits. Traders should also set reasonable expectations regarding the amount of money they could make or lose from trading, and they should never risk more money than they can afford to lose.

At the end of the day, the most important consideration for successful trading in a downturned economy is understanding the market and the trading strategies employed. There’s no easy way to make money from Forex trading; however, with a willingness to learn and a dedication to sound money management principles, forex trading can provide a profitable opportunity for those looking to take advantage of the current economic climate.

Impact of COVID-19 on the Housing Market

The novel coronavirus has caused an unprecedented panic and unsettling economic shock throughout the world. This has undoubtedly had an incredible impact on the housing market. Research has shown that the marginal effect of the government’s mortgage-backed security purchases in response to the COVID shock had lowered mortgage rates by about 40 basis points. Despite the post-downturn rise in house prices, economic distress continues to be evidenced through depressed rents and further economic downturn.

Unemployment Rate Impacting the Housing Market

The US Bureau of Labor Statistics revealed in May 2020 that the unemployment rate had shot up to 13.3%, the highest since the Great Depression. This, viewed in tandem with the current pandemic, has caused the housing market to suffer a considerable shock. In most circumstances, high unemployment rates correspond with decreased housing demand which then brings down housing prices. This effect is evidenced by the recent decline in housing growth which is further constrained by the systemic risk posed by social distancing considerations.

Expansion of Stimulus Programs and the Housing Market

In order to mitigate the economic consequences and risk caused by the COVID-19 pandemic, the US government has introduced various stimulus policies. These programs include provisions for those unable to pay mortgages, emergency rental assistance, and provisions for the homeless. Additionally, local governments have sought to implement aggressive rental assistance programs and foreclosure moratoria to help struggling homeowners. The combined effect of these policies has been an increase in housing demand, leading to an increase in house prices.

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