Bonds, Small Simple Guide

In recent days we have witnessed a historic event that has affected all those who are used to investing in Forex. The event in question was the referendum for Scotland’s independence from England. This event was very interesting not only for the historical, political and social aspect, but also for what interests us most, namely Forex. The currency market was definitely in turmoil for this event: the pound sterling (GBP) fell a lot in the days immediately before the referendum and the reasons are obvious: in case of victory of yes, the pound would have had a further decline, but in case of victory of no, this would have risen. For this reason, there have been many buying and selling movements with pounds sterling (single) and currency pairs with the GBP.

In order to provide a significant figure, consider 9 September, with the GBP/EUR exchange rate at 1.2436 or that to buy a pound would have taken 1.2346 euros, an all-time low that Forex professionals have not missed the opportunity to seize. Let’s be clear: the Forex professionals who believed in the victory of the no referendum, which was not at all sure. It was a risk, of course, because the referendum could be won by the separatists and then the GBP could have fallen further and then investors would have resold quickly the GBP purchased. Of course, these are speculative transactions, which are still legal, but which are different from long-term investments.

In this regard, remember that through the online trading platforms, or trading software offered by online brokers, you can trade currency pairs in daytrading, or on a daily basis. For example, between 18 and 19 September (the day after the referendum) the GBP/EUR rose from 1.2591 to 1.28, which translated into terms of profit is a very important figure. In fact, it is 200 pips that through the use of leverage (typical of online Forex trading) has yielded significant gains to those who bought the 18 (even better the 9) and resold on 19. From September 9 to 19 there are almost 400 pips difference.

Investing in Forex: the future

This situation was certainly due to an exceptional event, anything but daily, but you don’t need a great expert on current affairs and socio-political to understand that the same event could be repeated in other countries. The risk of Scotland’s independence was a risk because of possible “imitations” by other countries with the same situation, even if in such cases they are not separatist and independence movements in the same country, but towards Europe and the Euro. In fact, there could be several countries that could address the people through a referendum to find out whether they want to proceed with the euro and europe or not. Even if the event would have repercussions on all countries, the euro would certainly have a heavy repercussion on the dollar, for example. For this reason they should always be kept highly in mind as you could take advantage of it through the Forex, for an intraday gain through online trading platforms.

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