We’ve all heard the clichéd commentaries about 2020. But how has the Year of Covid-19 played out for people trading the financial markets?
Read on for our take on the markets and an update on what Tradeguider has been doing this year.
Markets up and down like the proverbial corona-coaster
The indices are finishing the year at new highs, but back in March the stock market was dropping like our moods.
For example, on March 9th the Dow Jones fell by 7.79% or 2,013.76 points to 23,851.02, its worst single-day drop in history. Three days later it dropped by 9.99%, the sixth worst percentage drop in history. On the 16th it fell yet more, this time by 12.93%, even worse than October 1929.
Then on the 23rd of March indices saw their lowest level since 2016.
Contrast that with the record highs witnessed as the year draws to a close. For example the S&P 500 finished above 3726 – its historical maximum – on 18th December, the DAX has regained the levels it was at 12 months ago, and the FTSE 100 and Hang Seng are also on the rise, albeit not reaching previous levels.
Next great depression? Next great opportunity?
Everyone has had a different experience of this pandemic. Some of the businesses that were hit hard were already weak. ‘They didn’t have a lot of strength on the balance sheet before Covid,’ observes Gavin Holmes, Tradeguider Chief Executive Officer (pictured right). ‘The pandemic just brought [their demise] forward a bit’.
As for what happened in March? ‘The financial markets had a corrective move but the market has been trending up since 2012 really’, he says.
The smart money knew that the herd trader would be thrown by the fear and panic – itself a contagion as virulent as Coronavirus – and move out of otherwise solid assets.
‘I don’t get affected by negative news,’ Gavin explains. ‘There are plenty of opportunities. I trust in the charts and in looking where the big money is positioning itself.’
People turned to trading the markets
This is not to minimize the suffering of those who have been hit hard financially by the pandemic. We don’t wish financial hardship on anyone and we send our heartfelt good wishes to anyone in dire straits, who has lost loved ones, or whose mental health has been impacted.
With that in mind, we emphasize that if you’ve lost your job and don’t have a financial cushion, then don’t start trading. ‘Don’t ever trade with money that you can’t afford to lose,’ warns Gavin. ‘Don’t trade stressfully.’
That said, trading is inherently Covid-safe and here at Tradeguider we have had many enquiries this year both from people who had previously traded and from newbies, particularly from Saudi Arabia and Egypt.
Some enquiries have come from people considering investing in the financial markets as preferable to being charged negative interest rates to keep their savings in a bank.
Our good wishes to anyone negatively impacted by the pandemic
So what have we seen in the markets?
Grigory Margolin, Chief Technology Officer at Tradeguider (pictured left), notes that in FOREX, the Euro and British Pound have been in a sideways move since 2016. ‘In general we can see slight up trends for both currencies in this year,’ he says.
‘The price of the British Pound reached the same levels that it was at the beginning of the year and is now testing the minimums of 2009. Overall this year the Euro has looked a bit stronger than the British pound. It is now above the minimum seen in 2012 but below the maximum seen in 2018.
This is contrary to the assumptions of many financial analysts that those currencies would collapse ‘due to the hassle caused by the economic situation, pandemic and Brexit.’
In FOREX specifically, British Pound and Euro traders who work on the bigger time frames doing investment or swing trading may have found profits to be slim as the price corrections over the year were deep yet recovered very quickly. This also means limited opportunities for countertrend Euro and British Pound traders as the market trend remained unchanged for most of the year.
Meanwhile Grigory notes that the volatility of financial instruments seen this year has made life harder for scalpers and intra-day traders, who have had to adjust their money management strategies and trading methodology accordingly.
What’s been happening here at Tradeguider HQ?
With team members in Australia, the US and the UK, we have always been a virtual company so our way of working together hasn’t had to change.
‘Zoom has become a very big phenomenon this year but for us, video conferencing has always been how we communicate as a company,’ says Richard Bednall, Chief Marketing Officer.
We were therefore able to carry on with our new launches without disruption: this new website, these blogs, our new product packages, the Resource Center, the Stock Scanning Service and our Spring and Autumn Trading Schools.
These were guided by our overall vision of making the Wyckoff VSA methodology accessible through the Resource Center. ‘We wanted to make sure that people have everything they need to learn the methodology without using the software’, Richard stresses.
Customer growth has fluctuated this year though. ‘When countries first went into lockdown globally, people came to us because they wanted to learn to trade, whether to generate a second income or have something to do while on furlough. It was great to bring new people into the company and into the trading world’. reports Richard.
But that dipped in September. ‘Collective confidence was very low,’ observes Richard. ‘Tradeguider had a tough late summer period but we weren’t alone – it was the same for many others in this industry and trading volumes in the exchanges reflected this.’
But as the year comes to a close this has turned around. ‘People have started to become confident. Maybe it’s because they see solutions on the horizon in terms of the pandemic’, he says.
Knowing who is the next President of the United States helps too.
See you next year!
Whether you can’t wait to see the back of 2020 and are raring to making 2021 the best come-back year ever, or you had a great trading year this year and want it to continue, check back early in January for our next blog which will be all about how to get your trading psychology on track for better trading profits.
And if you want to start the year by getting set up with lots of extra know-how and knowledge, then check out our Tradeguider Resource Center – we are offering a month’s free trial.
Tradeguider is the home of Wyckoff Volume Spread Analysis (VSA) and it's our mission to spread the word about it. Even if you don’t want to use our software, feel free to browse our educational content. We want people to know about the only chart analysis method that shows you what the real market movers are doing, so you don’t get caught out. Don't use Wyckoff VSA? We also have stock scanning services that can be used whatever your methodology. Get in touch for a demo and we might even sing you a Christmas song. Best wishes for the holiday period and a Happy New Year!