Trading Risks and Opportunities During Coronavirus (2020)
By Kade Sims on The Capital
In 2020, the world has been shaken by the effects of the coronavirus pandemic, yet as traders, it is often easier to spot the risks of trading during such a scenario than is to realize the plethora of opportunities that are presenting themselves currently.
Most trading is some kind of expression of either greed or fear, and in this situation, the expression of fear in the market has been strong.
Whenever this is the case, it is always wise to pause and to assess whether or not the abundance of fear means that now is a good time to enter as so many are trying to exit.
In this guide, we’re taking a look at the risks and opportunities that are presenting themselves in the midst of the coronavirus pandemic, as well as a few platforms we’ve selected as being the best places to trade during high volatility.
Coronavirus Collapses Global Markets
Over the past weeks, we have seen the economic impact of the novel coronavirus as it has rampaged the world’s financial markets, at first crashing stock markets and currency markets around the world, before we saw this lead to the sharpest single-day drop on the cryptocurrency market and its history.
While there is always a degree of volatility in financial markets, this level of volatility and the magnitude of these sell-offs is irregular to say the least, with this being the largest crash since at least 2008 global financial crisis, and in many cases, even longer than that.
This is largely caused by the huge amount of uncertainty in the market, being uncertain as to what impact having a third of the world’s population under lockdown will have, the impact of mass unemployment for many developed nations, as well as the long-term effects of the coronavirus on the financial markets of the world.
One thing is for sure, however, although it may seem as though the risk surrounding this period time is overwhelming, the truth could not be further from that in fact. There is, as well as an increased risk, a wide range of opportunities that have presented themselves during this time for the traders that know how to monopolize upon them.
Risks During the Crash
As can be expected, during any kind of crash within a financial market there is an increased likelihood for the generation of loss, as well as an increased amount of risk involved.
The two predominant kinds of risk present during a crash is the risk of holding a long position that is placed prior to the crash without a stoploss, with the second predominant kind of risk being the risk of missing the opportunity to generate profit from the crash.
Often during any kind of crash within a financial market, price movement is fueled by emotion, and mainly fear, and this can lead to extremely fast movements in price.
Because of this, inexperienced traders may not be used to these kinds of conditions and may end up making decisions that are poor choices because of the increased intensity of the trading environment.
Opportunities During the Crash
There are a vast array of opportunities that are present currently during the coronavirus-led market crash, with just some of these being the fact that oil has lost 70% of its value, and that many of the world’s strongest currencies have currently dropped because of huge sell-offs.
Options that traders have in order to monopolize upon the situation include buying some of the heavily discounted stock indices that are available today.
Although this is a significant historic event in financial markets, it will be over one day, and then once the coronavirus has been beaten by the world’s governments, there is likely to be a substantial upward trend to follow.
As well as this, other opportunities exist such as trading oil globally, with both significant long and short opportunities currently available, as well as trading commodities such as gold, that offer enhanced capital security during conditions where many assets are seeing extreme volatility.
Perhaps the most important thing to remember during the current market instability is that the selection of a trading platform which can be used to safely and successfully generate profit is paramount.
Choosing a platform that has access to global traditional asset and cryptoasset markets, including a wide variety of tools and trading instruments being available, allows for the maximum number of opportunities for revenue generation during this period.
Best Places to Trade During the Crash
PrimeXBT
PrimeXBT is the world’s leading multi-asset margin trading platform and over the past few years has experienced exponential growth within its user base and trade volume, at a level that is unprecedented within the cryptocurrency industry.
PrimeXBT lists one of the widest ranges of trading assets available, with crypto assets that include BTC, ETH, XRP, LTC, and EOS, having leverage of up to 100X available, and traditional assets that include the worlds leading forex pairs, stock indices, commodities, and metals, with leverage of up to 1000X available.
PrimeXBT also has a wide range of order types that include OCO orders (one-closes-the-other), and stoplosses in order to be able to safely trade throughout any crash.
PrimeXBT’s fees are also kept at being the lowest of any major cryptocurrency trading platform in the industry, with a flat rate across all assets and trading sizes of just 0.05%.
PrimeXBT is an innovative and cutting-edge cryptocurrency and traditional asset trading platform, that packs a wide range of assets, along with a number of powerful tools and features that are optimized towards helping traders to master profiting in global financial markets.
eToro
eToro is one of the world’s largest traditional asset trading platforms, having launched way back in 2006 in Tel Aviv, Israel, and growing over the past 15 years to become one of the more recognized traditional asset margin trading platforms available online today.
eToro provides a professional trading platform that is secure, easy to use, and attractive, as well as proving a wide range of traditional assets to trade.
A couple of drawbacks of the platform are that although it does provide cryptoasset trading, etoro is not a cryptocurrency-centric platform and has only added these services quite recently, whereas other options available provide better services within the cryptocurrency market.
As well as this, eToro is considered to be one of the more expensive options available, with some of the highest fees for trading anywhere online.
Apart from these two points, eToro is a good place that tries to provide a reliable environment in order to generate profit.
In Conclusion
While there are many who have left the market, it’s clear that there is a wide range of opportunities that are currently presenting themselves now, and that are not commonly available to traders.
Because of this, it’s wise to see this period of time as an opportunity, and a rare opportunity at that, to be able to enter the market at prices that are as low as they currently are.
While currently, the coronavirus pandemic is putting the global economy on hold, it will not be this way forever, and more to the point, at some point in the next few months life will return to normal, where we can expect to see a large reversion in the downward trend that we’ve seen over the past few weeks.
Check out the platforms listed above if you are looking for good candidates for trading platforms to use during periods of high volatility.
