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.
The firm's main research and development office is based in Tel Aviv Israel. It originally specialized in Forex and indices spreadbetting and CFDs but has recently expanded in stock trading also. At the time of writing, eToro has 2.2 out of 5 star on Trust pilot. The comments suggest that the platform offers some impressive features but withdrawing money can be difficult. Having said that, some of the negative reviews appear to be rants rather than constructive criticism. This can be examples of traders losing money through their own recklessness rather than eToro's fault. You should therefore take this reviews with a pinch of salt. OANDA is a global financial services company providing advanced currency solutions to both retail and corporate clients all over the world. In this article, we are going to review this broker’s trading options, tools, platforms, spreads, commissions, security measures, and educational resources to help traders make the right choice. AvaTrade offers a wide variety of trading solutions (spread trading, CFDs, and social trading), and peace of mind with its comprehensive regulation, covering the EU, Australia, Canada and South Africa. Clients can use a variety of platforms for discretionary and automated trading.
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76% of retail investor accounts lose money when trading CFDs with this provider.
76.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing
76% of retail investor accounts lose money when trading CFDs with this provider.
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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