With the Coronavirus affecting the whole world, no stone is left unturned and even the financial markets are affected by the epidemic. Most CFD traders would start leveraging investments and increase profit during economic decline and certain periods in the market. Is it still possible to profile from these economical climates and what are the most volatile markets for CFD trading in 2020?
Stocks
Make no mistake, despite the combination of Brexit, Coronavirus and other geopolitical situations in the year 2020, the stock market still has been one of the single most volatile CFD markets. It has still maintained its popularity as the asset for CFD traders since most are able to leverage this for trading volatility. Even with the restrictions imposed, most CFD traders are still targeting and are aligned to short-sell stocks further with the Asia-Pacific and China. Some companies heavily reliant on China productions may see some prices tumble, based on the first and second quarter of the year. When prices start tumbling, traders start to be on the lookout for situations such as these as this is a great opportunity for traders to look incorporating
Oil
For CFD Traders, commodities such as oil represent a volatile market. Given the impact of the Coronavirus to different parts of the globe, production and supplies have been affected and can be a reason for this volatility. This also has a negative impact on some currencies and as much as oil prices have been continuing to decline, this is a great opportunity for CFD traders to continue short-sell oil. The outbreak compounded with the breakdown of the OPEC agreement, which was made to manage production and global supply as a way of preventing continuous price decrease. Nations such as Saudi Arabia and Russia have withdrawn and pushed the globe for an all-out price war, despite being initially agreed by members and non-members.
Currencies
Based on years that passed, currencies have always been heavily favoured by CFD traders, mainly due to the fact that they enable investors to profit even as the market declines caused by its largely derivative nature. As is the forex or foreign exchange market has always been volatile as most are used to price shifts happening within it on a daily but given the current economic and social uncertainties across the world, it has been starting even large fluctuations for CFD Trading. We see more fluctuations at this point that are used for traders to leverage. The U.S. has announced strict travel restrictions to help control infections of the virus, while the Federal Reserve has also decreased its base interest rate by 50 basis points to help alleviate the financial impact. It is safe to assume that the US Dollar is a great way to give investment opportunities for CFD Traders, even in the midst of a pandemic as it’s performing far better than currencies such as the GBP and the Euro.
John Smith 