Trading Forex During a Global Crisis

Humans are used to normal. We wake up every day, take care of ourselves, and go to work. We eat, sleep, and spend time with our family. Things go well, well until we hear in the news one that they might not again. This can be because of a war, a disease (e.g. the current coronavirus pandemic), or anything that negatively shakes the world.

During those times, financial markets are often thrown into great distress. Most traders/investors panic and withdraw. Many lose. However, if you read and apply the principles in this article, you will be able to use times of global crises to give yourself some of the most generous financial rewards in your life.

What to Trade?

While Forex is definitely a top-pick financial instrument to trade during a global crisis, you might still want to look beyond it and delve into other markets. In actual sense, in such times, you can trade any instrument that has a strong directional tendency and is highly liquid. Examples of assets that fulfil these criteria are indices such as S&P 500, DAX30, Nikkei 225, and the DJIA.

Other instruments that you can trade also include commodities such as crude oil and precious metals. In fact, those assets can give you some of your best trades during those crisis times. However, they might require different, unique approaches. For example, the stock market indices are better shorted at the beginning of crises. And when the markets start to rebound, you can then decide to go long on them.

Similarly, for commodities. Usually, during hard times, there is a cut in the global demand for oil. Then drops in prices result. For precious metals and other similar items, the situation may not be as straightforward. For precious metals particularly, the response will depend on the nature of the crisis and the nature of the metal itself. As a result, precious metals can be tricky for novices to trade.

Even for Forex, you have to be careful. You should even more diligently study and observe any currency pair before you trade it. Nevertheless, a high-probable strategy during crises is to identify the countries that are being most hit by the crisis and short their currencies and go long on those countries whose currencies investors will be inclined to perceive as safe havens and hoard.

Tips For Trading in Global Crises

Now that you can make an informed decision about the most suitable asset to trade during any crisis time, you should also know some specific rules that can help you generate wonderful returns so long you will be willing to follow them. These rules include the following:

  • During global crises, the value of a stock can drop by as much as 30%. Do not be caught unawares. Know this and prepare for it.
  • There is no surprise. The worst market day of any crisis can be repeated or even beaten as long as the crisis is still on. Prepare for this, too
  • Global crises tend to present opportunities more for sellers. Thus, during them, it might make more sense to short than to long.
  • The earliest parts are often the sweetest. That applies to global crises, too. During any world crisis, the best time to open your positions is those first days. Join in early, join in tight.
  • Resist the urge to ignore your risk and money management rules. Nothing is sure. If you do not take due care, a world crisis can even make you worse off. So, protect yourself.
  • Keep your positions small and your stops tight. Do not be fooled by the volatility that tends to be high during the periods of global crises. Again, protect yourself.
  • Do not panic. But do not be too confident either. Volatility is high and even support and resistance levels can be broken. Also, you do not need to trade everything. 

A Trading Strategy For A World in Crisis

It is critical you know that while others may be wailing about the emergence of a crisis, you can actually profit from it. For instance, some of the best killings of all time are made in the Forex market during global crises. Although during the same time, the market tends to be choppy and hoppy, it can still present numerous high-quality opportunities for you to trade.

In such a time, all you need is a good strategy to tell you what to trade, in what direction, and how to trade it. Fortunately enough, many strategies can tell you these, but what is important is to ensure that the strategy you use gives only valid signals. After all, the market is most volatile during those periods and following the wrong signals can be pretty devastating.

Finally, no matter the strategy you use, always wait for valid forex signals on the hourly chart and then confirm on a lower timeframe chart such as the 5-minute or 15-minute chart. Once you see that the market has started moving in the opposite direction on a similar time frame, that might be the best time to sell.


There are good times and there are hard times. Global crises belong to the latter. But when they present themselves, breathe, knowing fully well that as a trader, you can still profit in them. At 1000pip Builder, they have got signals that will help you see to that. Subscribe to them here.

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