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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
