In markets there are terms which when seen mean nothing at all! A black swan event is such an example. Yet these are terms that every trader should know and understand. They often denote a random kind event, usually negative. Learning these terms won't necessarily make you a better retail Forex trader, but they will give you a greater breadth of knowledge.
In markets there are terms which when seen mean nothing at all! A black swan event is such an example. Yet these are terms that every trader should know and understand. They often denote a random kind event, usually negative. Learning these terms won't necessarily make you a better retail Forex trader, but they will give you a greater breadth of knowledge.
eToro.com is a reputable trading platform, famous in the social trading industry. In 2018, the brand decided to conquer the US market and launched the local brand there. First, the company functioned solely as a crypto trading broker. Yet, later it added other items to its list of tradeable assets. Therefore, now it offers stocks and ETF trading as well. With a history dating back to 2007, eToro has amassed a large user base across more than 140 countries. When cryptocurrency emerged, the brand used a unique chance to enter the American market. One of its key features is CopyTrader, the social trading tool and a proprietary product of the project. It allows novices to repeat trades from top traders with just a few clicks. Thus, the tool offers a fresh approach to this asset class. This guide aims to provide a comprehensive eToro review to help traders make informed decisions. eToro offers trading services across many regions worldwide including the USA OANDA (www.oanda.com) boasts of a high level of trust and reliability, as evidenced by its impressive Trust Score of 93 out of 99. While OANDA is not a publicly traded company nor does it operate as a bank, it is subject to regulation by seven Tier-1 regulators, signifying a highly trusted status. Additionally, it is supervised by one Tier-4 regulator, which means that users should utilize a cautious approach to risk management. A standalone copy-trading ecosystem, providing equities, foreign exchange, commodities and cryptocurrencies markets. Provides a global selection of brokerages.
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OANDA Corporation is regulated by the CFTC/NFA. OANDA is a member Firm of the NFA (Member ID: 0325821). CFDs are not available to residents in the United States.
A black swan event is one which is impossible to predict and is negative. So strong is this kind of event, because of the financial losses which usually follow, that the market has given a name to it! Whereas white swans are seen as a paragon of beauty and virtue, black swans are generally viewed as being evil. This mythical view gives sense as to how the black swan event came to be used to describe a big negative financial event.
There is no accepted way of defining a black swan event, it is an interpretation. Forex market participants will come to an agreement that an event was a black swan because it was so unexpected and will cost them so much. Yet this is a simplistic view. Markets are risky by their very nature. There are so many variables involved that it is impossible to predict how they will behave in the future. Just try and predict central bank monetary policies! Although we live in a time where central banks seemingly go out of their way to tell us what they are planning it was not always so. Forward guidance might be the rage today, (or a version of it) but this was not always the case.
A recent black swan event was the election of Donald Trump to be elected President of the United States. Cast your mind back before the result was announced, Hilary Clinton was expected to win. Indeed many were willing her to win as Trump was seen as an outsider with ideas which were at odds with the political leaning of our time. When it became apparent that he could win, the geopolitical risk he was thought to represent drove world markets, such as the S&P500, lower. Yet soon there was a realisation that his corporate friendly policies, such as the reduction of corporate tax, would be ideal. What had seemed like a black swan event has actually turned positive: the S&P500 recovered and at the time of writing has continued to push higher.
The unpredictability of this event means there is no road map to deal with it. Yet there are certain ways which can help reduce the impact. A good risk management approach to your Forex trading can help. Taking steps to limit your exposure to any one position by only risk 1/2% per trade of your portfolio, is a wise move. Having a risk-based approach where your focus is not losing money, should help you avoiding blowing up your account.
There is no singular way of avoiding a black swan event. By their very nature they are unpredictable, random and for those unprepared, painful. Any retail Forex trader should be prepared for the worst, whilst being flexible to take advantage of opportunities. Diversification and limiting the size of each Forex position, gives you the best chance of limiting the impact of a black swan event.
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