Picture happy new year

Happy New Year!

2022 has come to an end!

It has been a year filled with success, lessons learnt, returns and above all the formation of the Swedish Forex Group.
In this post, I wanted to share some of the most important aspects of 2022 and what I will take with me into the exciting year of 2023.

Quite early in the year something happened that I personally didn't think could happen in 2022 - a war broke out when Russia invaded Ukraine. One morning in February we woke up to the terrible news and all the world's financial markets reacted strongly to the uncertainty created. Even though traders need volatility and movement to make money, such sudden, unexpected events are scary as the price of different assets tend to move quickly in one direction. It was very nice for me that the EA (trading robot) I use was cautious and did not open a trade in that situation.

Another issue that has been on almost everyone's mind this year is inflation, interest rates, fuel prices and electricity prices.
After the world's central banks pumped money into the economy during the pandemic, we are now experiencing the downside of this in the form of extremely high inflation. As there is more money in circulation after stimulus, the value of the money decreases. The Riksbank's best tool to try to bring inflation down to the target of 2% is to raise the policy rate, which makes it more expensive to borrow money. This, combined with higher prices for both fuel and electricity, means that ordinary people have less money to move around with, which ultimately brings inflation down to a more normal level. But what does all this have to do with trading?

All these events, and especially interest rates and inflation, are two measures of how much a country's currency is worth and is expected to become. So, for example, when the Federal Reserve (the central bank in the United States) announces whether it will raise or lower interest rates, it has an impact on the price of a dollar, which in turn affects the forex market as a whole.

The impact of these events is not purely positive or negative but what is important to recognise is that they create larger than normal movements in the market. Since it is possible to speculate on both the rise and fall of the forex market, the potential for profits increases, while the risk increases if the movement goes against you.

Now that we are starting 2023, I am taking some lessons from the past year with me. The most important thing is to, regardless of what happens in the world and on the market, have a risk level that can handle most types of market situations and world events. Sometimes things go very well for a long period of time, which means that you almost forget that there is a risk and then increase your exposure in the market. And this is usually when something unexpected happens and you find yourself in a situation where you don't feel comfortable.

The next lesson I take from the year is that even if unexpected events occur and the world situation looks dark, it is possible to make good money in the currency market. Compared to the stock market during the same period, it has not given investors such a good return. The two markets do not correlate with each other, which means that even if the stock market is doing poorly, it does not automatically mean that you cannot make money in other markets. As mentioned above, traders need volatility (movement) to make money.

The last and, in my opinion, most important lesson I take with me into 2023 is not to be afraid to go outside your comfort zone when it comes to investments. It is usually during periods of uncertainty and bad times that the very best investments are made. When the stock market is blood red - buy shares. When the housing market goes down, invest in property. When no one else dares to get into trading - you do it.
Because that's what it's all about - when the majority of people are holding on to their money, selling off shares or otherwise being extremely cautious, you should be thinking exactly the opposite.

If you do what everyone else does, you will get the same results as everyone else.

With that said, Svenska Forexgruppen wishes you a very happy new year and see you in 2023!