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How do forex trading volumes typically react to hardship?

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asked Apr 21 in Forex by Bruce (2,610 points)

1 Answer

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answered Apr 21 by Mark (3,200 points)
As a general rule, the appetite for forex trading declines as the macroeconomic and geopolitical climate worsens. So, whereas investors are keen to embrace liquid derivatives such as currency when the global economy is buoyant, there are more inclined to seek out secure stores of wealth (such as gold) during periods of austerity.

This makes perfect sense of course, as currency is a highly volatile derivative that can cause traders to lose far more than their original investment. Conversely, the demand for and the value of gold rises as the economy continues to endure hardship, with prices known to increase incrementally as other macroeconomic factors decline. Gold can therefore be held as a physical store of wealth until the economic experiences growth once again, and the reliable nature of this precious metal offers genuine reassurance during difficult times.
commented Apr 21 by Bruce (2,610 points)
Thank you on your answer.