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Top 5 reasons to start trading Forex in 2021

The fact that eight of the ten largest one-day point losses for the Dow Jones Index in history occurred in 2020 speaks volumes about just how unique a year it was for the markets. But it wasn’t just stock Indices that moved in 2020. Forex pairs saw heavy volatility as many people took advantage of the trading opportunities that arose. But don’t worry, this year is set to be equally rich in Forex opportunity. So, here are five reasons why you need to take on the markets, start trading Forex and make 2021 your year.  

  • 1. COVID
  • 2. China-US Trade War
  • 3. Brexit and the EU
  • 4. US Turmoil
  • 5. Changing Times

1. COVID and global uncertainty sent shockwaves through the financial markets

Given it’s been the most prominent focus in our lives for the last year, COVID is number one in this list. Whether it’s the infection rate, talk of vaccinations or looking ahead to what life will be like once the pandemic’s over, it seems that for 2021 at least, it will continue to dictate our lives.  

Huge uncertainty remaining in areas like travel, hospitality and retail, it’s difficult to anticipate when an economic recovery will come – if at all. Add the threat of mutated strains into the equation, and things could even get worse before they get better. But as the arrival of the pandemic caused a market-wide crash, an ending to COVID will likely catalyse an economic recovery. Such a recovery will create plenty of trading opportunities in Forex, and other markets such as Energies, Gold and Silver, waiting to be taken advantage of.  

For instance, the rapid rollout of the vaccine in the UK, which saw the vast majority of the population receive their jabs far sooner than their European counterparts, was significant to the markets. As a result of the swift vaccination action, the pound’s value spiked against the dollar and euro. If you can identify which countries are recovering from COVID, you can exploit that by trading the corresponding FX pair. These Forex opportunities are happening right now waiting for you to take advantage, and they will continue to occur as long as we still have COVID.

2. China-US Trade War: The aftermath of Trump’s political warfare continues to impact Forex markets

A staple of Donald Trump’s regime as president was his crackdown on, how he put it, ‘The greatest theft in the world’ referring to China’s exploitation of trades with the US. He made a point to stand up to President Xi, leader of the second most powerful economy. His imposition of stricter tariffs of Chinese goods being sold in the US heightened tensions and sparked a trade war that played a significant role on the markets.  

These tensions cause uncertainty and results in traders getting nervous about their investments. Nerves then translate to a lot of buying and selling across the markets, which is why we see market volatility. Whether market prices are rising or falling, the beauty of trading is you can take advantage of movement in either direction. Volatility is the significant aspect – if the markets are volatile then there will be an abundance of opportunities to capitalise on. Don’t miss out, be sure to take advantage and trade the markets now .

It’s not just Sino-US relations that have been in the headlines. Trump also made history by becoming the first sitting president to visit North Korea in an attempt to ease the nuclear threat from the dictator-led nation.  

Elsewhere, hostility between the US and Iran intensified after the assassination of Iranian general Qasem Soleimani, and the rising threat of Russia has also contributed to tensions.

Although Joe Biden seems less eager to bump heads with other major leaders, the US is always going to be embroiled in hostility due to the country’s influence on global economies, and its integration with so many different nations.

But will Biden now revoke the tighter Trump-imposed tariffs imposed on China? Will Sino-US relations sweeten moving forward? Could there be further retaliation from Iran on the way?  

We’ll get more clarity on these questions as we progress through 2021, and how these conflicts unravel will determine Forex market moves. These major inter-continental tensions have the potential to cause huge shifts in Forex markets, should, for instance, the China-US trade war escalate. When it did in August 2019, China’s yuan fell to 11-year lows, which just shows how major Forex trading opportunities can arise from these conflicts.  

Fortunately, there are plenty of these intriguing international relationships for you to monitor over the course of 2021 that have the potential to cause similar moves in Forex.

3. The Brexit fallout set to weigh in on markets throughout 2021

Talking of strained relationships, the United Kingdom and the European Union is another duo that have hardly been fond of one another in recent years. The shock result of the 2016 EU referendum catalysed heavy losses for GBP, which lost 10% and 7% against the US dollar and euro respectively. It had been over 30 years since lows of $1.33 against the dollar had been seen.  

Since then, there’s been a close correlation between the pound’s value and any news or further clarity about Brexit. Even though the UK has now officially left the EU, the world is still longing for more clarity on how the future relationship between the two will look.  

Throughout the rest of 2021, we should slowly start to see the true impact of what Britain leaving the EU means for business, the economy and the markets. Therefore, Forex will once again be heavily in focus. Imports seem to be one of the most prominent issues, and if we don’t see this improve it’s likely to weigh in on FX pairs like GBPUSD and EURGBP.   

4. US Turmoil – With the threat of civil war still looming, it could be the markets in the firing line

The US is the global powerhouse, an economic giant that has a huge influence over economies across the world and more importantly for forex traders, huge influence over the markets. However, the US is also experiencing tumultuous times at present that are causing mass unrest and instability.  

Black Lives Matter protests following the death of George Floyd threatened to spark a civil war, a situation not helped by the outgoing President naturally stirring the pot with his vocal and unreserved opinions. The presidential transition could add to the instability, with Joe Biden looking to undo a lot of what Donald Trump implemented in office.  

But what does this mean for Forex? If there’s potential for further unrest in 2021 it could be negative for the US dollar. We’ve already seen just how violent clashes between the civilian population and government forces have already been. It seems it won’t take much for the anger to boil over once more.

If this comes to fruition in 2021, the knock-on effect this will have on businesses, employment, tourism etc. would be damaging. As a result, Forex pairs like GBPUSD and USDJPY could see strong moves and opportunities in the Forex markets will be rife.  

5. Changing Times – Why a new era of society could provide a unique opportunity for traders 2021

A fifth and final reason to trade Forex in 2021 is the fact that we might be entering a new stage of society.  

We’ve all been forced to adapt to a new way of living, working and surviving due to the pandemic. What was initially thought to be a temporary solution has become a more permanent way of living, but despite being well into 2021, things still aren’t looking like they will revert to how they were. The majority of people are still working from home and sectors are advancing their digital operations.  

This shift in mentality relates to opportunity. Think about it, how many times do we imagine we were back at the start of the internet era? With hindsight, it would be an ocean of opportunity, with many new companies looking for investment – something you could exploit to your advantage.

We might be entering a ‘post-COVID’ era, where new leaders could emerge and unknown businesses, countries and markets begin to rise up and take advantage of this new state of society. It might be difficult, but it’s certainly worth just keeping an eye on a number of the more innocuous FX pairs, or exotics, to see if one country’s emergence as a new economic presence translates to a spike in that country’s currency. There may never be another opportunity like this again in our lifetime, so it’s the perfect time to get on board and start trading Forex now.  

How to take advantage and start trading Forex in 2021?

GMI is a global trading broker and specialises in connecting people just like you to the Forex markets. With over a decade of experience, we’ve learnt exactly what our traders need to be successful. Sign up for a GMI account and start trading today with our tight spreads, high leverage and dedicated support. Don’t let another opportunity pass you by – join the action now by visiting gmimarkets.com.

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