By Robert Colville on February 3, 2016 in The Lazy Trader’s Blog
Ever wondered how the volatility in financial markets can affects traders and their decisions to trade? Yesterday, our very own founder and CEO took part in an interview with Jenny Hammond (World Finance) to discuss how uncertainty is affecting traders.
In the interview, which filmed on location at World Finance’s headquarters in central London, The Lazy Trader discussed a number of pertinent topics including the current market volatility, the impact of the Chinese Renminbi on currency markets, in addition to why moving averages are such a popular choice of tool for technical traders.
World Finance is a bi-monthly print and online magazine that provides rigorous coverage and analysis of international finance and the global economy.
(Jenny Hammond, World Finance and Rob Colville, CEO The Lazy Trader)
Jenny: Foreign currency trading has many of advantages which other ways of financial trading may not, but at the same time there are risks involved too with me here now to discuss is a self proclaimed Lazy Trader Rob Colville
Well Rob how has uncertainty impacted on traders?
Rob: In January traditionally we see a fall of equities and we see more of a return in “risk off”, however at the moment we’re seeing a pull back in the markets and people are just waiting to see whats going to happen next in terms of economic releases
Investors who love market certainty when the bear climbs the stairs that’s when theres certainty traditionally but when bears falls out the window, we can typically say theres uncertainty, and at the moment we can say that the FTSE is falling…news from China hasn’t helped that, but for traders we love volatility, uncertainty brings volatility and enables us to get into positions and if we’re at the right side of the market it enables us to determine the outcome pretty quickly.
Jenny: As you’ve said people have pulled back from markets and I don’t really understand exactly why that is because I know we’ve had a lot of issues the China slow down, oil prices are down that sort of thing but these are things that has been happening for a while now, there not exactly new so why are markets going down now.
Rob: It’s interesting that is the governing sentiment and people are looking to essentially make money going short; investors are getting jittery. We saw the all time high of the FTSE last April and of course anyone who is going to be buying the FTSE certainly last year will be at the top of the market – it’s not a very good place to buy, and fear essentially spreads it’s a great motivator people panic
Jenny: Well lets move onto the Forex Market now and how is that being impacted on uncertainty
Rob: Well we’re seeing a further growth in the US dollar; it’s traditionally a safe haven, and we’re seeing a decline in the British pound, the Euro has traditionally been bullish this time of year just after Christmas, January, February but I think that all in all if equities are going to fall we’re going to see a decline in currencies, limited to “risk on” like, for example, the British pound, the Aussie dollar, Kiwi dollar and so forth. Canadian dollar is losing ground in a rather dramatic way against the US dollar and that’s because of oil prices which are collapsing as we know bit I think we are just seeing a return to risk off.
Jenny: This is certainly a popular way to invest the Forex market what sort of tools do you think are the best way to do this?
Rob: Having access to current prices, in terms of charts us technical traders we tend to call in what we see not what we think, we’re looking at the charts for clues…I’m always looking at current data and past data as I’m trading on the higher time frames I’m looking at the past 5 years to identify clear buy and sell levels opportunities to buy a dip in an upward trend or sell a in a downward trend I’ll be doing that certainly with the British pound looking to sell a rally in a downward trend.
Jenny: I think the big story for the Forex market is the Renminbi which is part of the IMF’s currency basket do you think it’ll have much of an impact.
Rob: China there looking to circumvent the US dollar in terms of imposing the Renminbi as the currency of choice with their trading partners potentially we will see a bit of competition with that against the US dollar, but as far as the Renminbi is concerned, I think it’s a bit too early to say.
Jenny: When you speak to a lot of people about the Forex market, they say you’ll never make your fortune trading Forex, what do you make of this?
Rob: A lot of people who trade financial markets fail unfortunately. I think it’s a staggering statistic like 92% of people because they don’t bother to implement a strategy, they don’t bother to learn what’s involved and they’ve got a tiny account. You can make a lot from Forex trading providing you have a big account, your consistently profitable and your well funded, and you know what you’re doing… but frankly a lot of people see Forex trading as a get rich quick scheme.
You can view the original interview on the World Finance website