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Thread: Could the forex market collapse?

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    Default Could the forex market collapse?

    Could the forex market collapse?

    Introduction
    The short answer to this question is "yes" and "no". The entire forex market cannot collapse, but some currencies may collapse at any time. The sharp declines in the currency markets are different from those we might see in the stock markets, in the sense that falling prices in the forex market usually affect a particular currency, not all currencies combined. For example, when the Swiss central bank decided to disengage the franc and the euro, the Swiss currency jumped, and the rest of the other currencies took their course, in what is now known as a momentary collapse or flash crash. The same scenario was repeated with the Japanese yen at the beginning of 2019 when the currency rose sharply within a few moments and also caused the rest of the other currencies to fall.


    The difference between stock market and forex market collapses

    Stock market collapses are different from the ones we see in the currency market in terms of the fact that stock market falls usually affect most stocks since they are all trading in the same currency. For example, the collapse of the S&P 500 will often lead to sharp declines for the majority of listed companies, as is the case with all other stock markets and indices.

    On the contrary, the worn out currency markets usually affect one currency, like the British pound or the US dollar, which usually appear due to the occurrence of unexpected events create shock investors and cause them to sell the work on as rapidly as possible. However, forex trades usually involve two currencies, such as the GBP/USD pair, i.e. the British pound against the US dollar, which means that the dollar will rise as the pound falls.

    Based on this scenario, while GBP buyers will experience sharp falls in the value of their trades during this crash period, those sitting on the other side of the trade will make huge gains after taking advantage of the USD / GBP rise.

    The same scenario applies to any other currency that may collapse, as the currencies corresponding to it will make strong gains at the same time as the value of that currency is eaten up in the forex market.

    The fact that the forex market has a huge number of currencies, each representing a different country and region, means that it is impossible for the entire market to collapse because each currency trades in a pair against another currency, and therefore the corresponding currency will benefit from the collapse of the other currency.


    What causes the collapse of currencies?

    Now that we have proved that the forex market in its entirety can not collapse overnight, even though some work may be individual declines sharply from time to time, let's take a look at the most prominent cases of collapse the currency markets in the past years. We would like to recall first that there are two main types of price collapses, the first being long-term declines, and the other being instantaneous declines. Long-term declines usually last for months, possibly years, while momentary collapses occur in seconds and usually last no more than an hour.

    Regardless of the nature of the price crash, investors of the currency in question incur heavy losses that can sometimes lead to their entire accounts being wiped out.


    Long-term currency collapse

    The long-term collapse of the currency is often associated with the prevailing social and economic conditions in the country concerned, and therefore usually lasts for long periods. These cases of currency collapse often occur when the country is facing a major crisis, such as a military coup, spiralling inflation or other major economic challenges.

    For example, Venezuela's currency is facing a severe crisis as the value of the bolivar has plummeted in the wake of U.S. sanctions that mainly targeted the country's oil industry, which is Venezuela's main source of foreign exchange.

    The ruling regime in Caracas is also controlled by an authoritarian government and isolated from the international community, which has severely damaged its economy. This is one of the most striking examples of a long-term currency crisis, the solution of which takes many years.

    However, this type of long-term currency crisis often appears in developing countries that lack strong institutions and are mostly managed by authoritarian rulers who implement populist policies that do not satisfy investors, which ultimately adversely affect the country's economy and may lead to its collapse.


    Beware of momentary collapses

    Forex traders were hit hard by the Japanese yen's momentary and sudden collapse on January 2, 2019, with the Japanese currency jumping 3-5% against other currencies, such as the US dollar, in just eight minutes.

    This sudden jump caused traders with open positions on JPY to suffer significant losses/gains. This price jump lasted only a short time but caused great damage to most traders by triggering stop-loss orders in their sell positions, which in some cases led to some accounts being whistled within a few minutes.

    Most currency analysts attributed the sudden jump to automated trading systems, especially given that there were no exceptional economic or political events that could explain the resounding collapse, which occurred during a week-long bank holiday.

    Some experts pointed out that the price crash occurred between 5pm and 6pm New York time, commonly called the magic hour, due to the lack of liquidity during that period due to the closing of the New York markets while the Japanese markets have not yet opened.

    Some experts also pointed to Apple's announcement this week of a weak revenue forecast due to slowing sales in China after the close of the New York session, this announcement may have raised investor concerns and consequently stimulated this momentary collapse.


    The collapse of the Swiss franc

    A month after the Japanese yen fell, on February 10, 2019, the Swiss franc also suffered an instant, but less severe, collapse during the Asian trading session where it fell strongly against most major currencies, including the US dollar. Most analysts attributed this momentary collapse to low liquidity levels as Japanese markets were closed for the National Foundation Day holiday.

    The Swiss franc was exposed to a similar scenario years ago, but this time it was not just an instantaneous climb, jumping to unprecedented levels in January 2015 after the Swiss National Bank announced the disengagement of the franc and the euro and abandoned the 1.20 price stabilization. This surprise announcement caused the franc to jump in moments by 20% against the euro and other major currencies.

    Concluding remarks


    It is important to note that momentary collapses are nothing new to the currency markets because they have often been repeated in the past, even though, as we have said, the forex market is not completely collapsing at once. Though, the thing interesting is that the recurrence of landslides longer justified which does not lack for obvious reasons, has become a more common phenomenon in the financial period. That is why we always recommend that you follow the proper rules of risk management when trading in the forex market so as to avoid exposure to heavy losses when instant collapses occur.
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    Match of 2019 was plagued with shares of slowing global growth at theme exacerbated bi trade was mainly between the US and China that worked to drive uncertainty and delay some businesses from making capital outlays. Intern clipping global trade and prolonged policy and certainly e excited further pressure on the already flowing economics of the world. S growth forecast tapered off the case for higher equity valuations was undermined as future profit outlooks previous expectations.

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    Quote Originally Posted by green-land     
    Could the forex market collapse?

    Introduction
    The short answer to this question is "yes" and "no". The entire forex market cannot collapse, but some currencies may collapse at any time. The sharp declines in the currency markets are different from those we might see in the stock markets, in the sense that falling prices in the forex market usually affect a particular currency, not all currencies combined. For example, when the Swiss central bank decided to disengage the franc and the euro, the Swiss currency jumped, and the rest of the other currencies took their course, in what is now known as a momentary collapse or flash crash. The same scenario was repeated with the Japanese yen at the beginning of 2019 when the currency rose sharply within a few moments and also caused the rest of the other currencies to fall.


    The difference between stock market and forex market collapses

    Stock market collapses are different from the ones we see in the currency market in terms of the fact that stock market falls usually affect most stocks since they are all trading in the same currency. For example, the collapse of the S&P 500 will often lead to sharp declines for the majority of listed companies, as is the case with all other stock markets and indices.

    On the contrary, the worn out currency markets usually affect one currency, like the British pound or the US dollar, which usually appear due to the occurrence of unexpected events create shock investors and cause them to sell the work on as rapidly as possible. However, forex trades usually involve two currencies, such as the GBP/USD pair, i.e. the British pound against the US dollar, which means that the dollar will rise as the pound falls.

    Based on this scenario, while GBP buyers will experience sharp falls in the value of their trades during this crash period, those sitting on the other side of the trade will make huge gains after taking advantage of the USD / GBP rise.

    The same scenario applies to any other currency that may collapse, as the currencies corresponding to it will make strong gains at the same time as the value of that currency is eaten up in the forex market.

    The fact that the forex market has a huge number of currencies, each representing a different country and region, means that it is impossible for the entire market to collapse because each currency trades in a pair against another currency, and therefore the corresponding currency will benefit from the collapse of the other currency.


    What causes the collapse of currencies?

    Now that we have proved that the forex market in its entirety can not collapse overnight, even though some work may be individual declines sharply from time to time, let's take a look at the most prominent cases of collapse the currency markets in the past years. We would like to recall first that there are two main types of price collapses, the first being long-term declines, and the other being instantaneous declines. Long-term declines usually last for months, possibly years, while momentary collapses occur in seconds and usually last no more than an hour.

    Regardless of the nature of the price crash, investors of the currency in question incur heavy losses that can sometimes lead to their entire accounts being wiped out.


    Long-term currency collapse

    The long-term collapse of the currency is often associated with the prevailing social and economic conditions in the country concerned, and therefore usually lasts for long periods. These cases of currency collapse often occur when the country is facing a major crisis, such as a military coup, spiralling inflation or other major economic challenges.

    For example, Venezuela's currency is facing a severe crisis as the value of the bolivar has plummeted in the wake of U.S. sanctions that mainly targeted the country's oil industry, which is Venezuela's main source of foreign exchange.

    The ruling regime in Caracas is also controlled by an authoritarian government and isolated from the international community, which has severely damaged its economy. This is one of the most striking examples of a long-term currency crisis, the solution of which takes many years.

    However, this type of long-term currency crisis often appears in developing countries that lack strong institutions and are mostly managed by authoritarian rulers who implement populist policies that do not satisfy investors, which ultimately adversely affect the country's economy and may lead to its collapse.


    Beware of momentary collapses

    Forex traders were hit hard by the Japanese yen's momentary and sudden collapse on January 2, 2019, with the Japanese currency jumping 3-5% against other currencies, such as the US dollar, in just eight minutes.

    This sudden jump caused traders with open positions on JPY to suffer significant losses/gains. This price jump lasted only a short time but caused great damage to most traders by triggering stop-loss orders in their sell positions, which in some cases led to some accounts being whistled within a few minutes.

    Most currency analysts attributed the sudden jump to automated trading systems, especially given that there were no exceptional economic or political events that could explain the resounding collapse, which occurred during a week-long bank holiday.

    Some experts pointed out that the price crash occurred between 5pm and 6pm New York time, commonly called the magic hour, due to the lack of liquidity during that period due to the closing of the New York markets while the Japanese markets have not yet opened.

    Some experts also pointed to Apple's announcement this week of a weak revenue forecast due to slowing sales in China after the close of the New York session, this announcement may have raised investor concerns and consequently stimulated this momentary collapse.


    The collapse of the Swiss franc

    A month after the Japanese yen fell, on February 10, 2019, the Swiss franc also suffered an instant, but less severe, collapse during the Asian trading session where it fell strongly against most major currencies, including the US dollar. Most analysts attributed this momentary collapse to low liquidity levels as Japanese markets were closed for the National Foundation Day holiday.

    The Swiss franc was exposed to a similar scenario years ago, but this time it was not just an instantaneous climb, jumping to unprecedented levels in January 2015 after the Swiss National Bank announced the disengagement of the franc and the euro and abandoned the 1.20 price stabilization. This surprise announcement caused the franc to jump in moments by 20% against the euro and other major currencies.

    Concluding remarks


    It is important to note that momentary collapses are nothing new to the currency markets because they have often been repeated in the past, even though, as we have said, the forex market is not completely collapsing at once. Though, the thing interesting is that the recurrence of landslides longer justified which does not lack for obvious reasons, has become a more common phenomenon in the financial period. That is why we always recommend that you follow the proper rules of risk management when trading in the forex market so as to avoid exposure to heavy losses when instant collapses occur.
    The interesting thing is that they have been working good and market is not collapse lack of the information shows that market is going to the downward direction sometime it will be going to the upward direction it is not the clearly when its movement market purple rose so shows at risk management system is a very low forex market is a good Movement in nowadays you can investment on the same version of the market se if you want to generate a good type of the business so I suggest that you can investment on the currencies and shares this is a great opportunity for all type of the process because market is going to the too much app for directions, US dollars a moment is a not clearly some time it will be going to the filtration and sometime it will be going to download direction because it is effect on the other currencies more Mansa so I suggest that you can avoid this type of the currency and you can investment to the shares and generated a long time business management systems, when your system is a good you have been generated good type of the learning

    Though trading on financial markets involves high risk, it can still generate extra income in case you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    Quote Originally Posted by green-land     
    Could the forex market collapse?

    Introduction
    The short answer to this question is "yes" and "no". The entire forex market cannot collapse, but some currencies may collapse at any time. The sharp declines in the currency markets are different from those we might see in the stock markets, in the sense that falling prices in the forex market usually affect a particular currency, not all currencies combined. For example, when the Swiss central bank decided to disengage the franc and the euro, the Swiss currency jumped, and the rest of the other currencies took their course, in what is now known as a momentary collapse or flash crash. The same scenario was repeated with the Japanese yen at the beginning of 2019 when the currency rose sharply within a few moments and also caused the rest of the other currencies to fall.


    The difference between stock market and forex market collapses

    Stock market collapses are different from the ones we see in the currency market in terms of the fact that stock market falls usually affect most stocks since they are all trading in the same currency. For example, the collapse of the S&P 500 will often lead to sharp declines for the majority of listed companies, as is the case with all other stock markets and indices.

    On the contrary, the worn out currency markets usually affect one currency, like the British pound or the US dollar, which usually appear due to the occurrence of unexpected events create shock investors and cause them to sell the work on as rapidly as possible. However, forex trades usually involve two currencies, such as the GBP/USD pair, i.e. the British pound against the US dollar, which means that the dollar will rise as the pound falls.

    Based on this scenario, while GBP buyers will experience sharp falls in the value of their trades during this crash period, those sitting on the other side of the trade will make huge gains after taking advantage of the USD / GBP rise.

    The same scenario applies to any other currency that may collapse, as the currencies corresponding to it will make strong gains at the same time as the value of that currency is eaten up in the forex market.

    The fact that the forex market has a huge number of currencies, each representing a different country and region, means that it is impossible for the entire market to collapse because each currency trades in a pair against another currency, and therefore the corresponding currency will benefit from the collapse of the other currency.


    What causes the collapse of currencies?

    Now that we have proved that the forex market in its entirety can not collapse overnight, even though some work may be individual declines sharply from time to time, let's take a look at the most prominent cases of collapse the currency markets in the past years. We would like to recall first that there are two main types of price collapses, the first being long-term declines, and the other being instantaneous declines. Long-term declines usually last for months, possibly years, while momentary collapses occur in seconds and usually last no more than an hour.

    Regardless of the nature of the price crash, investors of the currency in question incur heavy losses that can sometimes lead to their entire accounts being wiped out.


    Long-term currency collapse

    The long-term collapse of the currency is often associated with the prevailing social and economic conditions in the country concerned, and therefore usually lasts for long periods. These cases of currency collapse often occur when the country is facing a major crisis, such as a military coup, spiralling inflation or other major economic challenges.

    For example, Venezuela's currency is facing a severe crisis as the value of the bolivar has plummeted in the wake of U.S. sanctions that mainly targeted the country's oil industry, which is Venezuela's main source of foreign exchange.

    The ruling regime in Caracas is also controlled by an authoritarian government and isolated from the international community, which has severely damaged its economy. This is one of the most striking examples of a long-term currency crisis, the solution of which takes many years.

    However, this type of long-term currency crisis often appears in developing countries that lack strong institutions and are mostly managed by authoritarian rulers who implement populist policies that do not satisfy investors, which ultimately adversely affect the country's economy and may lead to its collapse.


    Beware of momentary collapses

    Forex traders were hit hard by the Japanese yen's momentary and sudden collapse on January 2, 2019, with the Japanese currency jumping 3-5% against other currencies, such as the US dollar, in just eight minutes.

    This sudden jump caused traders with open positions on JPY to suffer significant losses/gains. This price jump lasted only a short time but caused great damage to most traders by triggering stop-loss orders in their sell positions, which in some cases led to some accounts being whistled within a few minutes.

    Most currency analysts attributed the sudden jump to automated trading systems, especially given that there were no exceptional economic or political events that could explain the resounding collapse, which occurred during a week-long bank holiday.

    Some experts pointed out that the price crash occurred between 5pm and 6pm New York time, commonly called the magic hour, due to the lack of liquidity during that period due to the closing of the New York markets while the Japanese markets have not yet opened.

    Some experts also pointed to Apple's announcement this week of a weak revenue forecast due to slowing sales in China after the close of the New York session, this announcement may have raised investor concerns and consequently stimulated this momentary collapse.


    The collapse of the Swiss franc

    A month after the Japanese yen fell, on February 10, 2019, the Swiss franc also suffered an instant, but less severe, collapse during the Asian trading session where it fell strongly against most major currencies, including the US dollar. Most analysts attributed this momentary collapse to low liquidity levels as Japanese markets were closed for the National Foundation Day holiday.

    The Swiss franc was exposed to a similar scenario years ago, but this time it was not just an instantaneous climb, jumping to unprecedented levels in January 2015 after the Swiss National Bank announced the disengagement of the franc and the euro and abandoned the 1.20 price stabilization. This surprise announcement caused the franc to jump in moments by 20% against the euro and other major currencies.

    Concluding remarks


    It is important to note that momentary collapses are nothing new to the currency markets because they have often been repeated in the past, even though, as we have said, the forex market is not completely collapsing at once. Though, the thing interesting is that the recurrence of landslides longer justified which does not lack for obvious reasons, has become a more common phenomenon in the financial period. That is why we always recommend that you follow the proper rules of risk management when trading in the forex market so as to avoid exposure to heavy losses when instant collapses occur.
    Now a days market is moving very good quickly pizza because of coronavirus your market is moving upward and downward very quickly and trading is becoming the so much difficult I think no one can handle the collapse of the market now because I already there is too much volatility in the market which is not good for the traders and for the market also


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    Forex market can move at any time, so you need to work with good knowledge while working on forex market and try to get your trade to very good profit Because when you apply trades for good profit loss, you use very good knowledge of forex in your trade and because of that good knowledge you get very good profit.

    Though trading on financial markets involves high risk, it can still generate extra income in case you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    After the end of the second world war and since the stock market has fallen the world needed
    a new market that is stronger and wider and not very easy to collapse so they have created the
    forex market or to be honest the sole or the concept of the forex market present since thousands
    of years and even before the forex market has been made officially we were making financial
    exchange every day i think and even in ancient eras the concept of exchange present, It wasn't
    really money-money exchanging but it was done with goods so the concept of the forex market
    always present and i can't even imagine that the world nowadays in particular may even replace
    the forex market with another market because the global world needs forex

    Though trading on financial markets involves high risk, it can still generate extra income in case you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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