If you’ve got a smartphone, chances are you’re very much aware of the crisis ongoing in Europe right now, particularly between Russia and Ukraine.
And before going further, we’d like to say our thoughts are absolutely with everyone in that region, as we unequivocally affirm that “WAR IS NO JOKE!”.
Evidently, this issue has quickly escalated from a subtle dispute to a full-scale international incident that calls for extreme diplomacy to avert a more disastrous occurrence, namely, World War III.
HOW DOES THIS RELATE TO YOU?
You ask, “does this really affect me? I mean, I’m in Nigeria, nobody is bombing me, and I even trade the markets using the Naira and not some foreign currency”, right? But it does affect you.
The global financial system is a web of interconnected entities, and as the word “Forex” implies, it includes the exchange of different currencies on a global scale.
So, what is going on in Russia and Ukraine does affect you as a forex trader.
Before digging deeper, as a Forex trader you must already know that there are two methods of analyzing the Forex market namely; technical analysis and fundamental analysis.
Where Technical Analysis is a method of analyzing the Forex market using patterns in market data (charts) to identify trends and make predictions, Fundamental Analysis on the other hand is a way of looking at the forex market by analyzing economic, social, and political forces that may affect currency prices.
You would agree that there are a lot of social, political, and economic factors at play right now that are currently influencing the market.
Here’s the idea in simple terms; the EU, USA,and many bodies have placed major sanctions on Russia for its invasion of Ukraine, which has already affected the Russian Ruble by causing a 40% dip in its value.
Secondly, Russia is the singular biggest exporter of gas to Europe and many other countries. These sanctions and the war places a major strain on its ability to keep supplying gas to these countries, which also stifles their productivity level.
WHAT SHOULD I DO NOW?
All these sanctions and strains on Russia’s economy are bound to cause a ripple effect on many other economies that have trade relations with Russia.
Many currencies are likely to dip in value. As such, you would want to ensure that in this season, you marry Technical and Fundamental analysis to make a well-informed move in your trading. Stay abreast of happenings by following the news.
Also, remember that news causes volatility, so tight risk management is something you want to be very intentional about during this period.
All in all, remember that in Forex trading, you can make money when the price dips or rises, so try as much as possible to trade what you see in the charts and not what you feel. The market doesn’t respect how you feel.
I’d leave you with these words, “The goal of trading is not to be right, but rather to be profitable.” As such, take out the emotions and be as objective as possible.
Cheers to a peaceful and profitable season.
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