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Can forex trading still prove profitable in a depreciating economy?

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asked Apr 21 in Forex by KevinAdams (6,040 points)

1 Answer

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answered Apr 21 by Alex (3,680 points)

 Keen sense of determinism can still profit from currency trading in a declining economy, while those with particular expertise can even thrive amid such turbulent conditions. Much of this has to do with the derivative nature of currency, which is highly liquid and allows investors to trade without assuming ownership of any underlying asset. So, even as the market begins to depreciate, traders can speculate and hedge against specific currencies to optimise short and long-term gains.

commented Apr 21 by Stan.Ostin (8,020 points)
Forex trading also allows investors to buy and sell currencies in pairs, enabling them to consistently back one to rise or fall against another. This creates a hugely flexible investment vehicle, and one that can deliver even greater returns during difficult economic times.
commented Apr 21 by KevinAdams (6,040 points)
Can you give me an example?
commented Apr 21 by Alex (3,680 points)
Let’s take the current economic climate as an example, as we have seen the sustained devaluation of the pound (GBP) while the US Dollar (USD) has seen consistent gains on the back of excellent data. Even though the GBP has seen periods of recovery since the UK voted to leave the EU last June, it continues to trade within a narrow range and underperform against the greenback, which in turn has enabled investors to back the USD / GBP pairing (or hedge against GBP / USD) with excellent results.

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