Yesterday morning my friend Nancy ventured a guess and wrote in her relevant post on binaryoptionswire that the situation in Greece will not end in disaster and that things will normalize eventually. At first I thought that her view was too optimistic but as the hours passed I have come to realize that she is most probable right. I don’t think that in the end Greece will leave the Euro, mostly because as Chancellor Merkel said yesterday “if the euro fails, then Europe fails”.
The US has already intervened in the crisis and Merkel’s calm leads me to believe that the show is not over until the fat lady sings. Moreover, especially because the reaction of the markets has not been overly dramatic, partly due to the intervention of the Swiss National Bank, the Greek side is showing signs of making second thoughts, feeling perhaps that the threat of a referendum did not capitalize as well as they had hoped.
Where I would disagree with Nancy however, is her advice to effectively sit this period out and wait for the crisis to past. Contrary to this view and irrespective of the actual outcome of the Greek saga, I would say that this is a good time to place some trades.
For the time being, the impact of the Greek crisis has been less clear in FX than in other markets, but scaling back your investment on Euro currency pairs is perhaps an advisable move to make. Indeed all forex companies are closely monitoring the developments and are taking measures and steps in order to avert the negative effects from sharp movements in the price of EUR instruments. Some brokers, for example FXPro, have warned their clients of possible changes in trading conditions amid potential rise in Forex volatility. Others, like FXCM, have taken more decisive steps and have tightened margin requirements for EUR pairs, while in an attempt to lower risk eToro has announced that it is temporarily implementing the Maximum Stop Loss feature to ALL instruments on the platform. As a result, when setting a Stop Loss (SL) amount upon opening a position, traders will no longer be able to set the SL at a 100% of the invested amount. Instead, they will be limited to a maximum Stop Loss rate of 50% for all instruments available.
All this being said smart investors who still want to place some traders on forex pairs should perhaps use this opportunity to examine other currencies, such as the GBP or even the NOK, ZAR, MXN. Such currencies and others, less traditional ones, may offer very good trading chances, especially since it is almost certain that other popular assets such as the USD/JPY, as well as the US stock market are currently over-bought.
In a nutshell, every crisis is an opportunity in disguise for as long as one does their homework properly. But since irrespective of which way it goes and even if it does miraculously get resolved before midnight tonight, the Greece situation will be causing volatility in markets for a few days to come, the best risk aversion method is always patience.