Japanese Brokers Issue Warning to Clients on Geopolitical Tension

We have been seeing a rise in geopolitical tensions over the last month or so as North Korea continues to test missiles and threaten the US. This has led to an increase in geopolitical tension in the region, affecting South Korea and Japan too.

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Brokers Issue Precautionary Warning

As a precautionary measure on account of this tension, 3 major brokers in Japan - GMO, Gaitame and FCTrade (FXTF) - have issued warnings to their clients saying that the upcoming days could see a lot of 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.

They warn of sudden price movements, increases in spreads, and limit and stop orders not being filled due to lack of Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term or sudden market movement.

They also said that this could be especially true on Mondays, and if there are any major developments over the weekend, then the market could open with a large gap - leading to orders getting filled at completely different prices.

Gaitome also fears that there might be further provocative action around North Korean National Day on September 9.

The increase in global risk has led to some choppy markets and this has in turn affected gold prices as well. Global tension always puts doubts in the minds of the investors, who pull funds from the stock market to put into safer assets such as gold, which is considered a solid investment.

This is why we have been seeing gold prices moving higher and stock markets moving lower whenever North Korea rears its head.

The brokers warn clients to be careful and trade in a responsible manner as they do their best to deliver stable rates and as high liquidity as possible.