Last update 2020.11.13
💹 When trading forex, we suggest you consider long term results.
What you can learn ahead🎓
- A brief review of 2020, a hard year
- Understanding the election cycle and the effects on forex
- The impact of elections on trading EUR/USD
- How to avoid mistakes in fundamental analysis
- The use of AI to help you invest
2020, a Hard Year for All 😷
If you are planning to invest, it is important to remember that we are not living in ordinary times. COVID-19 has severely curtailed global economic activity, and the US alone has already reported more than five million cases and 163,000 deaths. With the US economy struggling due to the pandemic, many Americans – including investors and forex traders – have been focused on Coronavirus instead of the presidential election, which seems to have garnered much less attention than we would typically expect.
But what does this mean for the currency markets during the presidential campaign 🗳? Will historical election year trends be reliable enough to guide your Forex trading strategy when the US economy is not functioning normally? The upcoming election provides an excellent opportunity to examine the data and trends from previous elections and look for patterns that could repeat themselves.
📌 In this article, we explain the implications of covid-19 in forex and how to invest during coronavirus.
Presidential election cycle 🧐
The presidential election cycle theory examines the connection between the US presidential election, which is held every four years, and patterns in the financial markets.
An examination of the association between US exchange rates and presidential cycles indicates a significant economic and statistical relationship. Research suggests the US dollar (USD 💵) has shown greater gains when a Democratic president holds the highest office compared with a Republican White House.
The researchers found the USD appreciated during the term of a Democratic president but depreciated over the four-year term of a Republican president. This conclusion was based on a review of the years 1957-2016, using the exchange rate of the US dollar against several major currencies.
One explanation of this phenomenon is that Democratic presidents often implement policies that stimulate short-term economic growth and higher consumption, which causes the USD to appreciate. A Republican administration, however, is usually identified with a pro-business agenda, which may result in a weaker dollar. President Donald Trump has often said that he wants to see a lower USD to make US exports more competitive and has not hesitated to criticize the Federal Reserve for not reducing interest rates, which would cause the greenback to depreciate.
Impact of the election on trading EUR/USD 📈📉
When we talk about the US dollar (USD 💵) performance in the forex, it is essential to take a close look at EUR/USD 🇪🇺 🇺🇸.
According to the theory we explored earlier, a significant change in the value of the US dollar on the day after election day is unlikely, but whether it will appreciate or depreciate in the months after the polls will be largely dependent on which candidate wins. If Trump wins, the impact on the euro (EUR/USD) would be a lower US dollar.
Will the USD strengthen in forex trading?
Over the past few months of 2020, the USD has retreated against the major currencies (remember to consider that Coronavirus also rocked the financial world). Although the US dollar is considered a safe-haven currency, investors have not been afraid to buy riskier assets, despite the severe economic conditions caused by COVID-19. This has meant that minor currencies such as the Canadian (CAD 🇨🇦) and Australian dollars (AUD 🇦🇺) have appreciated against the greenback in recent months.
🇪🇺 🇺🇸 EUR/USD is up 4.9% so far in 2020, and while USD/CAD 🇺🇸 🇨🇦 has appreciated in 2020, the symbol has fallen 5.7% since April. If this trend continues, it is expected to see the US dollar turn in a losing year in 2020.
The US may elect a Democrat to the White House in November, however, given the current state of the economy, it’s unlikely that this event alone would dramatically reverse the downward movement of the USD before the end of the year, despite the theories we’ve explored. And while it’s always difficult to predict forex pairs movements, the Euro (EUR 🇪🇺) and the Canadian dollar (CAD 🇨🇦) could end the year with gains against the USD.
How to avoid mistakes in fundamental analysis 🛡
2020 clearly showed that a good trading strategy requires taking into account an accurate fundamental analysis. But, how to properly incorporate fundamental analysis into my forex trading strategy? Well, an efficient trading strategy with fundamentals must always consider the following factors:
» Interest rate decisions
» Industrial Production
» Retail sales
» Consumer confidence surveys
» Geopolitical circumstances, such as elections, wars, and pandemics.
It is essential that you have access to a good 🗓 economic calendar, to be informed in advance and later about the forecasts and results of economic events. To keep up with off-the-beat external news, you should always consider reliable news sources like Bloomberg, The Wall Street Journal, and Financial Times.
The use of AI to help you invest 💹
1. Automated with AI-Trading. Check out the 3 steps to trade automated with our AI.
By trading forex automated with AI, you will save time and improve your performance without monitoring the market and managing trading platforms.
With Automated AI trading you do not need MT4 / MT5 and other trading platforms to invest in forex. All forex trades are automatically placed into your broker account every time that our AI system identifies a new worthy trading opportunity. You can monitor the AI trading performance in real-time directly on our dashboard.
Automated AI trading benefits ✅
- Portfolio diversification
- Setup in 3 minutes.
- Totally hands-off, from anywhere.
- Invest from just $1.
- APY of 43% over the past 10 years*.
- Lightning-fast execution & no slippage.
- No commissions, no management fees.
- Portfolio with 40 different automatic strategies.
- No MT4/MT5 or other platforms required.
- Test with a risk-free practice account.
- Trading results directly on our dashboard.
2. Manually with AI forex signals.
Wiseinvest also provides AI forex signals that perfectly fit into MT4, MT5, and any trading platform. To trade with our AI forex signals, you must simply copy the data you receive from each real-time signal into any forex brokerage account of your choice.
There are five unique variables for each AI signal, and each must be copied exactly, to match the performance of the signal as close as possible.
Each AI forex signal alert consists of the following five data points:
- Symbol (forex pair)
- Direction (long or short)
- Position size (number of units or lots)
- Take profit (price level to exit with maximum gain)
- Stop loss (price level to exit with maximum loss)
Check out how to trade with our AI forex signals.
- Subscribe to a Wise-Plan.
- Open a Brokerage account. Check this article about the best forex Brokers.
- Set an amount and a position size on our Wiseinvest dashboard.
- Our AI will send you real-time trading alerts by email and Telegram.
- Copy the signals and paste into your Brokerage account.
All forex signals are sent every time that our AI trading system identifies a new trading opportunity. Our trading strategies are developed on a variety of time frames such as 4 and 8 hours.
Wiseinvest AI forex signals are Market Orders and you do not need the entry price. You can copy each signal while it is available on our dashboard. We do this way to assure that traders will just place signals while they are good to be traded.
You can trade forex with our free forex signals clicking here, or with our Premium subscription that provides you unlimited AI signals and automated AI trading in partner brokers. Whether you are a beginner or a professional forex trader, our AI trading system can help you save time and improve your trading performance. Get started with free AI.
When investing through Wiseinvest automated AI trading or AI forex signals, you do not need to calculate pips and change the leverage in your forex broker account. Learn more about leverage in forex trading by clicking here.
- Moving towards the end of the turbulent year of 2020, the United States presidential elections and the Coronavirus were the events of greatest impact for forex trading and the entire financial world.
- Does the USD go up or down? The right answer depends on who will win the election and the direction tends to change if the Coronavirus continues to cause damage.
- Fundamental Analysis is based on the real economy, it means the production of goods, services, investment, and all aspects of our daily life.
- If you want to practice Fundamental Analysis you must be well informed, with a broad source of information and standpoints and a good economic calendar is a right tool you need.
- If you don’t have the time or the skills to do it, then use the Automated AI trading system to invest automatically or AI forex signals to be always aware of the best market opportunities.
Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.
The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. FXCM warns that 74.74% of retail forex traders lose money trading CFDs.
The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.