Overview of 2015 Forex Market Trends
It is important to understand the different forces and trends that influence the forex market in order to make better investments and stay on top of the latest developments. In 2015, forex markets saw a number of changes, from the rise of technology and financial technology to the US’s removal of stimulus policies. Furthermore, fluctuations in oil prices played an important role in the market. In order to better understand the 2015 currency market trends, it is necessary to examine each of these changes in more detail.
Impact of Technology and Financial Technology
The emergence of technology, such as blockchain and cryptocurrencies, has had a profound impact on the forex markets. In 2015, the technology was still relatively new and was yet to be fully integrated into the world’s major currencies. In the near future, the technology is likely to be integrated into the currency markets and is likely to bring with it a number of new developments. In addition, financial technology such as automated trading and algorithmic trading systems have been increasing in popularity in 2015, helping to shape the markets in a new and interesting way.
US Government Stimulus Removal
At the start of 2015, the US government announced it had removed its stimulus policies. This move was met with some criticism by some, however, it ultimately had beneficial effects on the forex markets. The removal of these stimulus policies helped to stabilize the markets and led to many currencies gaining strength against the US dollar. This in turn led to a healthy forex marketplace, with many currencies emerging as strong trading options.
Fluctuations in Oil Prices
The fluctuations in oil prices, particularly towards the end of 2015, had a major impact on the forex markets. Oil prices have long been a major factor in the global economy, and changes in oil prices can have a major effect on currency valuations. In 2015, the prices of oil dropped significantly, leading to a sharp decline in the price of the US dollar against many currencies. This in turn led to a number of opportunities for savvy investors, as many currencies experienced a surge in value due to the dropping oil prices.
In conclusion, 2015 was an eventful year in the forex market, with many different forces and trends influencing the market. It is important to understand the different forces at play in order to make successful forex investments. 2015 saw the rise of technology and financial technology, the removal of US government stimulus, and the fluctuations in oil prices. These changes all had a major impact on the forex market and helped to shape the market in a unique way.
What Are Flash Crashes?
Flash crashes are sudden and drastic stock market declines that happen in a very short amount of time. On Monday, August 24, 2015, a flash crash occurred, sending the S&P 500 stock index down as much as 103.88 points. As then JPMorgan analyst pointed out, this was due to “price insensitive” programs, which caused large and repeated sell-offs. To understand the significance of flash crashes, it is important to know how stocks usually trade.
How Stocks Usually Trade
Stock prices are determined by market supply and demand. Generally, when more buyers emerge, the stock price will increase and when more sellers come to the market, the price will decrease. Within this framework, several market mechanisms provide stability to the stock markets. An example of such market stability is a price based filter, which means if the price of a stock accelerates too quickly, trading will be suspended for a few moments and the price will adjust itself during those few moments.
What Causes Flash Crashes?
It is difficult to pinpoint what causes flash crashes, as they often result from complex program trading algorithms. The 2015 flash crash may have been caused by a large sell-order dumping as much as 4.1 billion dollars’ worth of S&P 500 e-mini contracts. Human traders updating their algorithms too frequently or improperly also contribute to rapid stock market declines. In most cases, the cause of the crash is not known until afterwards.
In some cases, the crash is caused by geopolitical shockwaves, such as the Brexit crash which occurred in June 2016. Thus, it is important for investors to be aware of worldwide economic events and dynamics.
To conclude, flash crashes are sudden and catastrophic price changes in the stock markets. They are caused by various complex factors, such as program trading activities and market volatility. As an investor, it is important to stay informed of global events and monitor the stock market movements to better protect your investments.
