Forex Reflections: A Year of Trading in Review

 

 

Before we dive into this brand new year, it’s good to reflect and look back at the year that has just gone. There’s a lot we can learn from 2017 to ensure we do more of the things that worked and less of the things that didn’t. Life as a forex trader is never easy but just because it’s not easy, doesn’t mean it can’t be an enjoyable experience. In this post, we will explore the good, the bad, the ugly and the funny sides of forex.

 

Hopefully, this article can inspire you to learn to trade and join this cacophony of money we call the forex market!

The Good Side of Forex

The most prominent story of 2017 also aligns with the good news that we saw in the forex market. Interest rates across the globe moved in ways that benefited many traders waiting for that announcement. From the US to Australia, the world saw the first signs of an economy leaving the 2008 financial crisis behind.

 

According to the US Department of Treasury, the FOMC raised interest rates between December 2016 and June 2017. Moreover, in their December 2017 meeting, they once again increased interest rates.

 

All savvy traders took this change to start selling USD vs other pairs. The greenback has been an up and coming since January 2017. However, if you were looking to invest £100 and get a high return, then the best chance was during June-July 2017. The EUR rally 1, 700 pips to the USD, wiping all of the gains the dollar made in the previous months. So for anyone who held the EUR/USD pair, their £100 investment turned into over £500 in return.

The Bad Side of Forex Trading

Not everything was perfect in the forex market in 2017. South Africa’s Rand saw one of the worst performances in recent history during the first week of November 2017. The collapse of the Rand in comparison to the USD was thanks to the coup d’etat in Zimbabwe. ZAR/USD pair hit as low as 14.30 during the days where there was no certainty about the political future of Zimbabwe, as well as Zuma’s speech on education and the economy.

 

In forex, the bad news is just good news waiting to happen. In the second week of November 2017, the rand rallied by 50 cents. So while £100 pound investment would not have yielded quite as much as the £500 return mentioned above, it showed how quickly the market could turn.

The Ugly Side of Forex Trading

Catalonia’s crisis led to a terrible loss for the Euro in the forex market. October 2017 saw the Spanish region claim independence, and the Euro had its worst performance of the year as a result. The ECB announced an extension its bond purchase program while keeping interest rates close to zero.

 

The USD/EUR pairing favoured those who held USD, and the crisis does not seem to be getting any closer to being solved. For those who want to learn to trade, the USD/EUR pair would be an excellent case study of why holding currencies for the long run is beneficial.

The Funny Side of Forex

On the funny side, we revisit the ZAR. The South African currency saw a bounce back when everyone was confident it was heading to a full collapse.

 

The FOMC and the ECB expressed concerns over the collapse of the ZAR before it suddenly returned to form a week later. It was a move that baffled everyone and made many forex experts look like fools.

 

A valuable lesson that, sometimes, it is better not to buy the hype.

 

What are your good, bad, ugly and funny memories of trading in 2017? We would love to hear your stories.

 

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