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forex during a recession?

  • #1
  • First Post: Sep 8, 2007 3:33pm Sep 8, 2007 3:33pm
There has been a lot of talk lately about a recession in the US and I was wondering how active and how much liquidity there is in the FX markets during a recession? Would a trader see a lot less pips, or maybe even more pips as people pull out of the stock market?
  • #2
  • Sep 9, 2007 5:42am Sep 9, 2007 5:42am
I would assume that with the onset of recession (if/when it happens) there will be much more uncertainty in the market, which leads to a withdrawal of highly speculative money, which in turn lowers liquidity, and which increases volatility. If you are purely a trend trader, then you have to trade smaller to accommodate wider stops; if you are a volatility trader, well, then you're in clover, unless you happen to be on the wrong side once too often, in which case you can go under very quickly...
  • #3
  • Sep 9, 2007 5:58am Sep 9, 2007 5:58am
One idea that has been seen through last month's market correction would be to short the commodity pairs like aus,cad and kiwi and go long yen. Why? The credit crisis has provided an opportunity to make fast returns lending out money to the banking institutions when liquidity is tight. Trades were closed out to get into this market. That is part of the reason why carry trading the yen unravelled so fast. That just my opinion, not fact. Next time I see that happening I'm ready.
  • #4
  • Dec 30, 2008 3:02pm Dec 30, 2008 3:02pm
hi , i'm afraid we are in for a long depression.

hyperinflation is in the cards too.

fx trading is perfect to make extra money, but i think that the monetary situation is so bad that fx trading for joe sixpack might come to an end.
  • #5
  • Dec 30, 2008 3:13pm Dec 30, 2008 3:13pm
Recession or not what's the one most important thing to us as traders?

The exchange rates move!

If the rates don't move, then we don't make money, plain and simple.
  • #6
  • Dec 30, 2008 3:30pm Dec 30, 2008 3:30pm
Quoting Ronald Raygun
Recession or not what's the one most important thing to us as traders?

The exchange rates move!

If the rates don't move, then we don't make money, plain and simple.

i wish it were that simple !!

look ; US an Europe are printing money for bailouts etc..

economy won't get better ..... then we get hyperinflation

what if curriencies are tied to gold in stead of the us$?
  • #7
  • Dec 30, 2008 3:40pm Dec 30, 2008 3:40pm
If we went back on gold standard, then forex is more or less destroyed and we may all very well end up trading exotics.

I doubt the banks will let their governments do that =D
  • #8
  • Dec 30, 2008 3:44pm Dec 30, 2008 3:44pm
Quote
what if curriencies are tied to gold in stead of the us$?

Then another country can buy up a lot of gold and cause massive deflation. Ppl are too young to remember, but the gold standard caused far more economic problems than it solved during it's time. Infact the gold standard caused a recession because of trouble in the gold markets.

As it is right now, currencies float. That means you can trade them against gold if you want, since you can always hold a position in gold, or you can trade them against other currencies, or even other commodities if you want.

There's no reason to tie currencies to a fixed metal. Just let ppl buy or sell commodities if they feel so inclined. That's the whole point of capitalism... if you have the money you can buy whatever you want.

IMO this current recession has been very good for forex. It's given us a lot of volatility. Move baby move.
  • #9
  • Dec 30, 2008 4:02pm Dec 30, 2008 4:02pm
Less liquidity -> larger swings -> more profit.
If you ask me I could get used to those 1700 Pip Swings on the EUR/USD.
  • #10
  • Dec 30, 2008 10:18pm Dec 30, 2008 10:18pm
Volatility!!!!!

Big news always brings big swings....IN a recession there is always big news...so bring on the big swings!
  • #11
  • Jan 1, 2009 6:35am Jan 1, 2009 6:35am
Quoting pointorpip
Volatility!!!!!

Big news always brings big swings....IN a recession there is always big news...so bring on the big swings!
it's not about the big swings , it's all about the us$ getting in SERIOUS trouble , caused by debt the US can't pay back.

Will the us$ be replaced y another currency, pegged to gold?

start thinking out of the box !!
  • #12
  • Jan 3, 2009 6:03am Jan 3, 2009 6:03am
well , strange too see that nobody's worried at all ;-)
  • #13
  • Jan 3, 2009 7:49am Jan 3, 2009 7:49am
Quoting 4stroke
well , strange too see that nobody's worried at all ;-)
No ones worried because everyone believes 2009 will be a better year. I personally believe, 1st, 2nd, and maybe 3rd quarter of 2009 will be much of the same as today. I don't feel any major changes will occur. Though I do believe, 4th quarter 2009 may be different. Hopefully, economy will be better around the holiday season.

Due to the declining USD, US govt should bring back "Gold" as the nations currency as opposed to the "Amero".

But those are my own pipe dreams and outlooks.
  • #14
  • Jan 3, 2009 7:52am Jan 3, 2009 7:52am
just food for thought ya'll...


In the “Global Age,” playing the best
currency moves will become as common an investment
strategy as was playing the stock market in the

20th century.

-Gerald Celente
The way is narrow
  • #15
  • Jan 3, 2009 8:04am Jan 3, 2009 8:04am
Like a friend of mine told me:

"You know your country is in trouble when you have two Black Friday's".

It wasn't funny at the time ... but I swear, a few days later I couldn't stop laughing.
  • #16
  • Jan 3, 2009 11:57am Jan 3, 2009 11:57am
Why not an Amero backed by gold?

Quoting Jhig
No ones worried because everyone believes 2009 will be a better year. I personally believe, 1st, 2nd, and maybe 3rd quarter of 2009 will be much of the same as today. I don't feel any major changes will occur. Though I do believe, 4th quarter 2009 may be different. Hopefully, economy will be better around the holiday season.

Due to the declining USD, US govt should bring back "Gold" as the nations currency as opposed to the "Amero".

But those are my own pipe dreams and outlooks.
Money Talks. Wealth Whispers. Charts Talk. Traders Whisper.
  • #17
  • Jan 3, 2009 12:07pm Jan 3, 2009 12:07pm
Quoting Tjpld
Less liquidity -> larger swings -> more profit.
If you ask me I could get used to those 1700 Pip Swings on the EUR/USD.

Who is in that avatar of yours - he's quite scary.
  • #18
  • Jan 3, 2009 12:45pm Jan 3, 2009 12:45pm
Quoting clockwork71
Who is in that avatar of yours - he's quite scary.
http://en.wikipedia.org/wiki/Kaya_Yanar
  • #19
  • Jan 3, 2009 3:40pm Jan 3, 2009 3:40pm
Quoting Dr.Geppynius
http://en.wikipedia.org/wiki/Kaya_Yanar
More like:
http://en.wikipedia.org/wiki/Klaus_Kinski

Most awesome actor ever.
Check out some interviews he's a genius.
Inserted Video
  • #20
  • Jan 3, 2009 10:16pm Jan 3, 2009 10:16pm
Quoting 4stroke
i wish it were that simple !!

look ; US an Europe are printing money for bailouts etc..

economy won't get better ..... then we get hyperinflation

what if curriencies are tied to gold in stead of the us$?
Correct me if i am wrong, but the last time gold was the equilibrium for the exchange rates across the board was in the late 40s or 50s. maybe earlier. The gold standard actually attracted less exports and increased imports, thus creating a deficit. Inflation increased. Thus the big five met somewhere in Ohio in the 60s to agree to let the exchange rates float.
letting the gold standard take place would be the last resort, and I do not think that the world has yet hit the bottom. I might be wrong. hehe
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