The forex market is one that has countless positive characteristics, but there is no denying that finding such elements isnt easy in a market so large. On paper it is one dominated by trading houses, large brokerage firms, hedge funds, and big banks. However, history shows that it is also a realm where an independent trader can be profitable. But individual traders may think again about trading forex after the events of January 2015. The following remembers what made the Swiss franc popular in the first place and what eventually brought it to its knees.

Switzerland and the Swiss franc have always had an important place within the history of foreign exchange. It qualifies as the sixth-highest traded currency in the world and despite not having much a reputation for conservatism; its importance simply cannot be undervalued. When looking at what drives the Swiss franc forward you need to take a long look at the country’s political stance. Switzerland has a longstanding history of neutrality and this can also be applied to their economy and currency. Considered a key harmoniser within the Eurozone, it stands as a non-member in order to remain independent and impartial. While the country is also considered a top choice for expatriated funds, as it is less sensitive to economic shifts when compared to neighboring nations.

The risk when investing in the Swiss franc (prior to the events of Janua ry 2015) came with the fact that the Swiss economy had an unnaturally heavy reliance on its banking sector. In the past when this was put under the pressure from rival nations like Germany and the United States the Swiss franc would suffer as a result. While the fact that the nation was forced to relax its secrecy laws also had a detrimental effect on its performance in the forex markets. Another odd element to the Swiss franc is that it is heavily protected by the SNB, especially when up against the Euro. Sadly, when this defence was lifted it became all the more evident why it was being so well controlled.

The Swiss franc was once considered to be the safest of safe bets, but an announcement from the SNB changed that way of thinking forever. In January 2015 it decided that it was no longer going cap the rise of the currency and threw the forex market into a panic as a result. The price of the Swiss franc went through the roof in the days that followed, destroying brokerage firms and trader’s portfolios as if they were one and the same.

Currency rates have proven time and time again to be unpredictable, but looking back it is clear that none could have predicted the events of early 2015. It has since ravaged the forex market and increased its level of unpredictability almost tenfold. If after finding out everything you want to know about the Swiss franc one thing should become very clear, if you want stability within a forex currency look elsewhere.

Spreadbetting, CFD trading and Forex are leveraged. This means they can result in losses exceeding your original deposit. Ensure you understand the risks, seek independent financial advice if necessary. The value of shares and the income from them may go down as well as up. Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Whos Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

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