The financial market and all the services that are involved in it are always affected by the events that are going all around the world and thus make them more vulnerable. In general, forex brokers and CFD markets did not have a good year in 2019. Client activity has decreased as a result of lower volatility and stricter regulation. However, in 2020, a totally different narrative will be told. While other businesses struggle to recover from the epidemic, the financial markets have made an unparalleled comeback.
Nowadays, at the time of writing this article, we are also facing the same problems and it is feasible to conclude that the coronavirus made brokers earn more profits. If that’s the case, how long will the success last? According to data, the first wave of brokers dealt efficiently with the coronavirus, and the same can be said for the second wave. The article will look at various indications that describe broker activity in the forex market.
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The general characteristic of the global covid pandemic economy was that it was highly volatile. The volatility which was directly linked with the coronavirus pandemic at that time had a great impact on several brokers. The greatest significant increase in trading activity occurred in March.
The impact on the economies was different from one country to another, but we cannot say that any country during the financial crisis managed to keep the same rate of employment, economic growth, etc. African countries are also worth mentioning in this case, as the majority of their economies are dependent on foreign investment and the pandemic has deterred the funding process at a significant rate. However, the demand for the financial market especially on forex and cryptocurrencies were massive in some of the major economies in Africa, such as Nigeria, South Africa, Kenya, etc.
The increased demand for the market directly means the increased demand for the brokerage companies and a lot of people are trying the best ways to connect with valid companies since, after the increased demand, the illegal activities were increased as well. The best way to try the brokerage company that will help you to make the process efficient decreasing various risks is to search for reviews, for example, such as this XM Forex broker review which gives detailed information about the technical characteristics of the company’s service as well as the reviews from the previous clients. The real-time story of someone’s experience is a better way to decide whether it is worth connecting with or not.
When we talk about brokers, we must consider Africa, where the epidemic has a tremendous impact on the economies of large countries. The second wave was particularly brutal in South Africa, but forex brokers there showed no signs of slowing down, and the number of individuals trading only rose. We may say the same thing about Nigeria, Uganda, and last but not least, Zimbabwe.
As a result, several service providers that were involved in the trading have reported the increased trading volume during the second wave, which was ideal for forex brokers, with some even hitting new highs and gaining the profits dramatically, as the epidemic continues to encourage the investors involved in the trading process. The official data and statistics prove that and it is also interesting to listen to the broker’s comments about the ongoing events.
The severity of the epidemic and higher volumes
Several chief operators of brokerage companies have made comments about the ongoing situation and correlation between the trading and global financial pandemic. Customers have been more active on all trading platforms as a result of the covid pandemic, according to Jeffrey Siou who is a COO of the ATFX group.
In the summer period of 2020, financial markets have been very turbulent, resulting in a plethora of trading possibilities for the traders who want to be involved in the process for the short-periods of time. Many clients profited from price movements in key financial markets, such as forex, commodities, etc. When we say that the clients have been more active during the process this is only because of the ongoing pandemic because people had more time to spend on their computers due to the fact that lockdown and quarantine were not giving the chance to go out. Thus our work, hobbies, entertainment, all of these and many others were done from our homes and computers. Moreover, the financial market is fully digitized and it was quite convenient for those who were planning to be involved in the market, and also for those, who became aware of the advantages of the financial market during the pandemic.
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The risk manager at ADSS, Fabian Chui has stated that from the professional traders he has heard that they have never seen such volatility during their entire career. Due to the shocks in supply and demand simultaneously, the financial market experienced extraordinary volatility. The pandemic’s development and severity caught the market off guard, wrestling in a huge spike in client trading activity. It was also the trend that intraday trading increased as clients attempted to catch the bottom and profit from volatility. Clients are also altering their posture and risk assessments to reflect volatility, drawing on lessons learned during the financial crisis that occurred in 2008.
Finally, we can boldly say that the forex market was one of the markets that stayed untouched during the first and second waves too. One of the main reasons for that is the market accessibility, that people are able to trade from anywhere in the world without the need for their physical presence. The activities of the brokers were not changed as well, since the industry is fully digitized, which made the process even more efficient and convenient.