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The following guest post is courtesy of freelance writer Zak Goldberg.
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2016 was certainly a year that anyone who lived through it will remember for a long time. From the spate of surprising celebrity deaths through to the shock and upheaval of political results on both sides of the Atlantic, it was a year full of drama and emotion for many, and as you might expect, this also made for some intense periods of volatility in the markets.
The Events That Made 2016 an Intense Year for Traders
When we look back on 2016 in the future, it is clear that the main historical impacts of the year will be the EU referendum in the UK, and the US presidential election. Both showed surprising results and had immediate and deep effects on the currencies they affected. The pound nosedived when the UK decided to leave the EU, and then was further affected by uncertainty after the resignation of David Cameron. The US dollar has been volatile since the run up to the election, with it showing greater stability when Clinton was reported as being expected to win, before going crazy whenever Trump appeared to gain ground. Relief rallies after the election saw the US stock market improve, but the dollar has not recovered yet.
Other Key Themes in 2016
These may have been the things that dominated the year, but forex traders didn’t just have those events to contend with. The issues around oil oversupply and the failed Doha summit in April had their impacts, and then there were the fears about China’s growth earlier in the year. The euro faced problems following the Italian referendum and suggestions that countries including Italy, France and the Netherlands may make moves to follow the UK out of the European Union. There were very few major currencies that didn’t have some of their own dramas to bring to the table for traders to sink their teeth into if they wanted to!
So, Was 2016 an Exceptionally Good Year for Forex Traders?
If you are a forex trader, volatility is one of the most exciting things, because it represents chances for things to move quickly, and for profits to be rapid and high if you make the right calls. The other side of the coin though, is that higher potential profits during volatile periods can also make for higher potential losses when you make the wrong move. Effectively, volatility happens when there is a high level of perceived risk, and as a trader, you really only have three choices – buy, sell or do nothing.
If you are someone who loves the thrill of currency volatility, then 2016 was almost certainly a year you found fascinating, but whether or not you made a lot of money, lost a lot of money, or performed about the same as you would have under less crazy conditions will all be down to your analysis, who you listened to, and your strategy. In terms of interest then, 2016 was certainly a good year, however in terms of results – you’ll have to decide for yourself!