Depending on what you’re read or who you listen to, the UK economy is either in a recession or on the brink of plunging into one.
According to the new EY ITEM Club Autumn Forecast, we’re already in one and with high energy prices, elevated inflation, rising interest rates and global economic weakness it’s expected the UK economy will be in recession until the middle of 2023
Whether we’re in one or not, there’s no getting away from the fact that things are tough and are probably going to get tougher over the coming months
So with all this talk about recessions, a financial crisis etc is trading the Forex markets a wise and shrewd investment decision?
Is Forex Trading Recession Proof!!!
The property/real estate market is a market that’s significantly impacted by the overall health of a country’s economy.
At times of recession, more people are out of work meaning they don’t buy houses and demand drops. Moreover property investors make their money when prices go up and not when real estate values are dropping.
Don’t get me wrong lots of savvy cash/asset rich property investors enjoy recessionary periods when it comes to purchasing repossessions etc to increase their portfolios.
However, in general investors look to purchase cashflow properties or buy and hold properties in an appreciating market.
So when it comes to recessions, making money in real estate when values are depreciating is very much restricted.
Property/Real Estate Market
After a big loss panic ensues which leads to anxiety.
When we experience these big emotions it can cause the pre-frontal cortex of our brain to take over and our logical brain to shut down
Our logical brain help us analyse, which is obviously a vital component when reading charts and executing trades…so take a break and clear your head.
Whether it’s a day, week, month or longer, there’s more than 250 trading days in a year so there’s really no need to rush things.
And in all honesty, there’s a very good chance this loss happened because you actually needed a break yesterday just before it happened.
Forex Trading During A Recession
Due to the nature of Forex and the wide range of currency pairs to trade, there are opportunities in equal measure whether you want go long or short and importantly you’re not restricted when currency prices go down unlike real estate.
Recessions affect different currencies in different ways, meaning there will always be opportunities to make money in the markets.
With as much as 50 different currency pairs to trade, you are spoilt for choice when selecting the pairs that best match your trading strategy.
Also volatility in the currency markets tend to increase during times of recession, which leads to even more money making trading opportunities.
But What About Trading The Stock Market In A Recession?
Stock trading is very different from trading currencies.
Trading stocks requires you paying very close attention to not only the overall market sentiment but also the performance of each and every sector.
Market sentiment and sector performance can have a huge bearing on how well individual stocks perform.
If markets are bearish, then it’s often more beneficial to either stay in cash or look for opportunities to short the stock.
However, there are some stocks you can’t short, meaning profitable opportunities are limited in a down market.
Of course there will be some stocks that buck the trend and outperform the markets during the recessions, but they will be rare as well as having a much higher risk.
Therefore, and similar to the real estate, recessions can have a negative impact the profitability potential of stock trading.
So when comparing other markets, Forex trading definitely comes out on top, providing fantastic opportunities to make money regardless of a recession or any economic turmoil.
However, here’s a dose of reality
Despite Forex trading being one of the most recession proof trading markets available to anyone wanting to make money, it obviously (as you probably know) comes with lots of risk.
To succeed as a trader, getting the necessary training, skills, knowledge and psychology is critical.
But once you acquire all this, Forex provides endless opportunities to make money (and very good money at that) in any economic climate.
So get your stuff done and go for it.
