Online Forex Trading News

On June 16, 2012 | By | In News, Political

Parliamentary elections in Greece

In the last few years markets have witnessed a volatility unprecedented in modern times. Although the equity sector has been cast into the spotlight, it should be recognized that currency trading, as well, has played a key factor in an increasing number of portfolios due to the liquidity of these positions as well as the potential for high short-term profit margins in a changeable climate. However, all of the recent happenings in the markets may soon pale in comparison when compared to the potential ramifications of the Greek elections taking place on June 17th.

Impact on Euro from Greek elections

All eyes are focused on the changing of the guard in the Greek government and what effect it may have on the financial markets. Many analysts already predict that regardless of whatever outcome, moderate to potentially extreme volatility lies ahead, particularly within the forex markets in relation to the value of the euro. It is suggested that in this climate, the room for speculation has been reduced greatly and with such predicted wide spreads, many are already seeking to reduce their exposure in currency trading until the results of these elections are clear.

Greece and a possible Euro exit

Only 10% of traders are bullish in regards to the euro while many are seeing the anti-bailout Syriza party to have a very real chance of possibly winning these elections, though few see a majority. Even if this party fails to garner enough votes to hold a majority, however, most other contenders wish to change the stipulations of the bailout package overall, which the EU has stated cannot be done. Simply put, it is becoming more and more clear that either way, the result will most likely be a strongly bearish outlook on the euro itself and more importantly, the question of financial contagion which Greeceā€™s exit from the euro may cause to the larger economies of Spain and Italy. Therefore, investors across the globe are carefully awaiting the outcome of the elections, expected to be preliminarily announced on the evening of June 18th.

High volatility in the currency market

While it seems a foregone conclusion that regardless of what outcome is presented volatility will remain high, it is also estimated that many traders will seek to take advantage of such wide spreads and capitalize on turbulence whenever possible. The key point is simple; with the volume of the forex market being approximately 4 trillion dollars on any given business day, savvy traders can stand to possibly make a very appreciable short-term profit. Additionally, as online forex trading has seen a massive influx of interest since the advent of high-speed internet and a proliferation of real-time trading platforms, it stands to reason that the individual as well as the institutional trader will both look to position themselves in short-term positions that could greatly capitalize on a weakening of the euro. While approaching this scenario can be a daunting task for the less seasoned investor, by utilizing the correct online trading platform he can be assured transparency, liquidity, and an exit strategy which can seek to hedge against this predicted volatility while maximizing short-term returns.

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