Category: Brokers

As the pace of vaccinations remains slow in the EU but continues to rise in the US and the UK, traders are pricing in the end of the pandemic this year, and that most of the world's economies will reopen to full capacity. That is pushing inflation expectations higher and higher, along with other things. 

Recently, traders paid attention to Friday's payrolls report, and it was spectacular. In addition to a massive 916,000 jobs added in March amid broad-based job creation, the unemployment rate fell to 6% from 6.2%, while the underemployment rate declined to 10.7% from 11.1% - from 7% pre-pandemic.

"we will return to the pre-pandemic level of jobs by year-end," said Bank of America (BoA) chief economist, "[the risk] is that the rate of job growth actually accelerates further given the stimulus-induced boost to spending and economic reopening."

That, of course, means more inflation is coming, and with higher inflation, the Federal Reserve (Fed) will be expected to tighten monetary policy sooner rather than later. 

At the moment, markets imply more than one rate hike by the end of 2022. Additionally, almost 140bps of tightening - almost 6 rate hikes - is now priced in between the end of 2022 to the end of 2024. 

As yields soar, along with rate hike expectations, bonds have been suffering. The world’s largest credit ETF scored its worst month of outflows since it began trading about two decades ago.

Investors took nearly 3.6 billion USD from the iShares iBoxx Investment Grade Corporate Bond ETF (LQD) in March, according to data compiled by Bloomberg. That massive outflow came as the 42 billion USD fund suffered its biggest quarterly rout in 12 years.

What's next? For us, it is hard to imagine precious metals and non-profitable tech stocks advancing in such an environment. The pressure on the Fed will continue to mount as inflation is clearly running loose across the globe. 

Large-cap companies should perform better than small caps as they are more resilient to rising rates due to more solid balance sheets. 

When it comes to the USD, it should be supported in this environment, and therefore we don't expect the EURUSD pair to rise further above this year's highs of 1.23.

As the year 2020 has come to end, a lot of Forex brokers have updated their traders’ unprofitability numbers as required by the ESMA regulations. Even though these numbers have to be updated by Forex/ CFD brokers on a quarterly basis, not all regulated European brokers do that regularly. However, the vast majority of brokers already refreshed their risk warning, so we can finally check the updates. 

We suppose the percentage displayed by brokers includes the number of all losing accounts divided by the number of all accounts during the last 12 months, since it is only the middle of the first quarter. We have checked 20 companies. The reason why some companies publish losing accounts percentage and some don’t (or stop publishing) is due to companies leaving/entering ESMA jurisdiction.

We can see that the lowest percentage of losers is 50% (TriumphFX), while the maximum is 82.78% (TradeFW). However, it is not actually possible to get a meaningful and believable percentage value due to the distorted data published by brokers reporting a range instead of a single number and by brokers with not enough EU traders.

The list of 20 brokers and unprofitability of their retail traders (sorted in an ascending order):

TriumphFX	50%
EBH Forex	51.38%
Everfx	65%
Etoro	67%
Valbury Capital	68%
Skilling	69%
Saxo Bank	70%
Trade 360	70.33%
City index	73%
IG Markets	75%
CMC Markets	76%
FXCM	76.31%
Plus500	76.4%
ETX Capital	76.42%
BDSwiss	78.8%
Forex.com	79%
Infinox	82.44%
TradeFW	82.78%

As of Wednesday, West Texas Intermediate (WTI) crude oil has been seeing gains for eight consecutive days, and at the time of writing is trading near 58.60 USD. Oil gained 135% in February alone, making it one of the best-performing commodities. 

Last April, WTI dropped below zero with the subsequent front-month contract trading at around 15 USD. This means oil has seen a staggering 280% gain since May 2021, and it looks like the rally is not over yet. 

Total, a French multinational integrated oil and gas company, and one of the 7 supermajor oil companies, reported a net loss of 7.2 billion USD for 2020, down from a profit of 11.27 billion USD in 2019, suggesting oil demand was incredibly weak last year.

Considering continued global lockdowns, demand could still be very low in the first months of 2021, putting further pressure on oil companies. 

Nevertheless, oil price is moving higher nearly every day. Oil and copper tend to be from the best inflation hedges in the world. When investors expect rising inflation, they buy hard assets, such as commodities. 

Since central banks and governments are flooding the system with money, inflation expectations are spiking higher, and oil will most likely continue to outperform other assets. We would not be surprised to see oil north of 70 USD, despite the global economic depression. That is what happens when uncontrolled money printing becomes a reality. 

Technically speaking, the next major resistance is most likely at 2020 highs in the 65 USD area. If that level is broken to the upside, oil could rise toward 2018 highs near 75 USD. 

Alternatively, the major support now stands in the 52/54 zone, and while oil trades above it, the medium and long-term outlooks look bullish.

When we look back on 2020, we’ll probably remember COVID-19, the sudden virus outbreak that tanked markets and crashed economies. The future looked painfully uncertain, and it dramatically affected almost every aspect of our normal everyday life. 

Despite the dark clouds and many weathered storms, 2020 had its share of silver linings too. For millions of traders around the world, it meant more time to invest in trading, more resources to level-up skills, and more market volatility to take advantage of. 

Sure it wasn’t a smooth ride for everyone, and there was a lot to adjusting, but there were also plenty of gifts for traders who looked for them.  Here are 10 gifts 2020 gave traders.

1. More time at home = more time to trade

If 2020 gave us anything, it was the gift of time. Being forced to spend more time at home meant a lot more free time to focus on trading. There was time to practice strategies, analyze  the market, and monitor its performance throughout the day. 

The near-unprecedented market volatility was also a big incentive to leverage the market’s highs and lows. There were plenty of those in 2020. 

As a result, brokers saw a significant uptick in trading volumes when the lockdowns were taking effect globally in March 2020, which means many more traders turned to their trading accounts and took advantage of opportunities.  

1. Lockdowns = More online efforts from brokers

With more flexible schedules, traders aso had time to level up their trading skills. They were at home with more time to kill. When the lockdowns began in March, Google Trends saw an increase in people searching for words like forex, trading courses, and day trading, almost doubling in some cases, since the beginning of 2020.

In response, brokers began providing more access to free online training courses, webinars, and market insights. It was a way to stay closer to traders since seminars and meet-ups were cancelled, and many brokers put extra effort to help traders navigate unprecedented extreme volatility that came along with unprecedented lockdowns. 

Videos with high production value helped traders understand the industry, trading academies on brokers’ websites were advanced and webinars frequencies increased. 

Topical webinars were particularly popular during the pandemic. With everyone safely at home and travel-limitations being enforced globally, there was record-breaking webinar attendance. 

With more people taking up trading, brokerage firms also aligned their offers to make it easier and more cost-effective for everyone to access the financial markets. Zero-commissions is now the name of the game. 

1. Negative oil prices = new oil indices 

On April 20, 2020, the benchmark price for crude oil in the United States fell to -$37.63. It was a historic crash and the first time oil dropped into negative territory. The shock of the Covid crisis was spreading and it triggered a sudden and very drastic drop in demand for oil. West Texas Intermediate (WTI) crude oil, dropped below $0 for the first time.

In response,  new pioneering oil indices were introduced to both protect clients and give them the opportunity to take advantage of the oil markets.  

With oil indices, traders could still take advantage of the oil market’s volatility, with less risk. These US and UK Oil Indices will not stop out positions if oil prices drop to $0.  These products are rebased at $100. That means, should spot price fall into negative territory, for example -$5 USD, the pricing of the index will reflect this at $95 giving traders the opportunity to leverage their loss.

The best part is traders can still analyze price movements in the same way as we would analyze oil, using the same fundamental and technical indicators to open and close positions. 

1. The world moving online = an edge for those who are already online

For online traders, adjusting to the post-corona world was relatively easy. Most professionals had to adapt to working remotely and purely online. For traders this was just another Wednesday, no transition was required. That meant that 2020 was slightly smoother for traders in comparison to others. 

During COVID they facilitated a smooth adjustment to home-based trading. Helping traders adapt through the pandemic and beyond is a comforting gift that makes it easier for traders to keep calm and carry on. 

1. Unstable markets + a tension-filled US election = stocks hitting all-time highs 

Buoyed by the prospect of a Democratic president and Republican senate, stocks hit an all-time high in November. 

Analysts were optimistic that a Biden presidency will deliver a new economic stimulus package that will be good for the markets, while a Republican Senate will likely block more expensive Democrat policies, like corporate tax hikes and debt-funded spending on infrastructure. 

That’s great news for the markets, and after the run the stock market had in 2020, it’s welcome news. Analysts are forecasting the stock market will remain strong throughout 2021, which means this gift will likely keep on giving.

1. A historic US election = interesting trading opportunities

Many CFD traders were sizing up their trading and risk management strategies and positioning themselves to trade the unprecedented volatility of 2020’s US election. 

Trump was up for re-election, anything could happen, and that kept volatility high in the markets leading up to November, 2020 - and beyond. Volatility continued to pick up as Biden captured enough Electoral College votes to win the U.S. Presidency, and even while Trump challenged states to vote recounts.

Every trader looks for a rise in market volatility for potential opportunities. That’s why the 2020 US election was a welcome end to the year. It has continued to deliver after the elections were called. The markets then turn their attention to the implications of a contested election and, potentially, a divided government.

Market volatility and the plethora of news that was driving the market, created many trading opportunities for traders. 

1. Trump tweets = trump tweets 

By now everyone is well aware of Trump tweets, which for the last four years have affected the world and the markets. Trump was in no way a conventional president so it wasn’t a surprise that he insisted on keeping his personal Twitter account active during his time in office. 

In 2020 - which would be his last year in office - his tweets continued to deliver a roller coaster ride of mixed emotions for traders. He shocked, terrified, amused, and very often baffled us with intentionally false or misleading information. 

The way he relied on Twitter and the way his Twitter account affected the world is as unprecedented as the Coronavirus lockdowns that defined 2020 - it’s worth mentioning that he was banned from Twitter in January of 2021. 

Who’s to say if the incoming president will be as prolific on Twitter, but it’s safe to assume he’ll be a lot less controversial and 2020’s obsession with the US president’s Twitter account is over.

1. Biden wins the US election = a gift for everyone around the world

On January 20, 2021 Joe Biden was sworn in as the 46th president of the United States. 

Any new US presidency tends to affect the market, but this specific presidency means an end to Trump’s divisive and controversial presidency. 

While the markets did see a lot of highs during Trump’s four-year term, towards the end, the USD had been weakening. A Biden presidency could bring more stability to the global economies. Analysts predict his policies for managing the health crisis and proposed investments in clean energy will be great for the markets.

Regardless of the markets, the United States and most people around the world let out a global sigh of relief, that one of the most controversial presidencies in history had finally come to an end.

1. An unprecedented NFP report = the return of the NFP effect

The US nonfarm payrolls report (NFP) has always been an anticipated news release that traders used as a cue for their next trading moves. But for May 2020, the NFP crushed market expectations by 9.5 million. The median estimate expected on Wall Street was -7.5 million jobs (lost). Instead, the NFP showed the actual figure was +2.5 million jobs (gained). 

The unemployment rate fell to 13.3% from 14.7% previously reported too. This had investors and traders hopeful, seeing clear indication that the US may be turning the corner economically. The stock market gained over 700 points, and the USD/JPY price action spiked.

That was one of our favorite moments this year. Despite all of the negative downturns, the May report offered a glimmer of much-needed hope for the markets after a very bleak first-quarter run. 

1. CFDs = a gift every single year

The markets were exceptionally volatile this year, and that was great news for CFD traders. Unlike long-term traders who buy actual assets and wait for them to rise, CFDs offer traders the opportunity to trade on both the upward and downward movements in the market. 

That came in very handy in 2020, because there was plenty of movement in the markets to leverage. 

It mattered not if the markets rose or fell as long as market prices were moving, there was an opportunity for CFD traders to trade on market's volatility. CFDs are designed to mimic their underlying market's trading environment fairly closely, so as you monitor your investment, you’ll see your profit or loss move with the underlying market price. With the right strategies, tools and understanding of the markets, trading CFDs can be very profitable. 

The flexibility CFDs offered traders in 2020 enabled them to take advantage of  the years exceptionally high-volatility. With all the uncertainty and risk to manage, CFD traders had the option to hold long as well as short positions, quickly adjust their strategies and hedge their portfolio. 

It’s been a roller coaster ride of a year for the financial markets, with crashes, losses, and unprecedented volatility. 

West Texas Intermediate (WTI) crude oil prices went negative at one point and still trail below 50 USD. The USD took a big hit, along with the GBP and EUR. The Forex market remained uncertain for most of the year, mainly due to the pandemic and the US presidential elections. 

However, market analysts are saying there’s a good indication that the wild ride may be over. The world has a COVD-19 vaccine now, as well as a new US president.

All of these events bring new hope for 2021 markets. However, if 2020 taught us anything, it’s that unpredicted events can happen, and when they do, they send massive shockwaves across financial markets. So what can we expect in 2021? New beginnings or more of 2020’s volatility?

Will the stock markets continue rising?

The stock market crashed in February 2020, the most significant drop since the Great Depression of 1929. Still, by November, Moderna and Pfizer had announced promising Covid vaccines, and the Dow Jones Industrial Average hit a record high of 30,000 for the first time in history.  

That’s the beauty of the stock market. It’s resilient and bounces back.

Analysts predict it will continue its rise through 2021. After an almost unprecedented fiscal and monetary response coordinated globally, interest rates have been historically low. These conditions have supported stock market gains in the past, and there’s no reason to suspect they won’t have the same effect in the new year. Interest rates are likely to stay low until the world has moved past the pandemic. 

How will the EURUSD perform? 

Most analysts predict the USD will decline. There are two significant reasons for the USD weakening.  The Trump administration poured USD into the market to stimulate growth when the lockdown began in March 2020. The U.S. Federal Reserve’s pledge piled on further pressure to keep rates at their record low. 

The European Central Bank (ECB) doesn't like the idea of a rising EUR because it negatively impacts exports.  However, a weaker USD may cause a hike in the price of EUR. So if the trend continues, EUR/USD could jump to 1.24 in 2021. 

Will the GBP remain uncertain?

The British pound is the fourth most frequently traded currency on the global market. With the USD expected to weaken under the new US administration, analysts are focused on the performance of the GBP against a weak USD. 

Widespread distribution of a vaccine, a weaker USD, and an agreement on a Brexit deal support the GBPUSD pair in 2021. 

However, a lot is riding on the Brexit deal, with many analysts agreeing that the sterling could potentially reach an all-time low if there’s no deal and pressure for negative rates to grow. 

There’s a lot of volatility in the pairing heading into 2021. If you’re interested in making the most of it, trading CFDs offers an opportunity to profit from both bullish and bearish price action potentially. You can either hold a long position, speculating that the GBPUSD rate will rise, or a short position, speculating that the rate will fall.