FX Trading At Times Of Economic and Political Turmoil - Lessons From Turkey

With geopolitical tension rising in Eastern Europe, the Middle East and Southeast Asia combined with the Fed tapering, developing countries are expected to suffer a multitude of economic and political crises over the course of the coming year and beyond. Such monumental events are bound to have effects on the trading behaviour of both institutional and retail FX investors and therefore also on the online brokerage industry that caters to them.

Since 2011, when the country’s financial watchdog authorized and regulated foreign exchange as an asset class, the Turkish FX industry has quickly reestablished itself with over twenty successfully competing firms today. And while no economy is exactly like another, being a part of the so called "Fragile Five," a term coined by Morgan Stanley to describe the most concerning emerging markets including also Brazil, Indonesia, India and South Africa, Turkey serves as a good example of what's expected to come.

Do trading volumes go down due to fear of the unknown or go up with the increased Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term associated with any crisis? Are foreign and domestic investors attracted to the currency pairs of countries discussed in the news or do they prefer to shift their investments outside the troubled area? These questions and more are essential to the performance of FX brokers.

In our Q1 2014 Industry Report, Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Magnates examines the lessons of the recent political situation in Turkey as well as the current example of the troubles in Ukraine to help draw conclusions on how FX trading volumes and trends might be affected during times of crisis anywhere in the world.

This analysis, and many other interesting articles and much more data, all crucial resources to successfully understanding the FX industry at 2014, are what makes the Forex Magnates Q1 2014 Industry Report a must have for any serious player in the Forex market. The report can be previewed here.