The spread of COVID-19 also finds strong adaptation for brokerage, fund managers or traders to a sudden change in overall trading activity tied to this pandemic. 

According to a special report by MSCI Liquidity Risk Monitor on April 30, the liquidity indicators during the COVID-19 global crisis are still at a significantly worse level than before the COVID-19. 

Doo Clearing Limited, London-based, FCA-regulated spot forex and contracts for difference (CFD) liquidity provider would enhance the ability of market makers to urgently find solutions so as to maintain the liquidity flow to business. This is the key to survival and to avoid a prolonged economic crisis. 

Currently, there is no signs that the COVID-19 pandemic will ease up any time soon. Nevertheless, brokerage, fund managers or traders should be proactive in monitoring and planning for liquidity impacts. 

Know the cash flows forecast 

Traders usually set cash-flow hedging strategies at the start of the year and generally don’t need to update them. But the disruption in forecasts may require traders to rethink their strategies. With liquidity, the market will go deep and smooth. 

In the financial markets, liquidity providers usually function as market makers who hold a substantial amount of a financial asset. Liquidity providers aim to bring price stability to the markets by ensuring proper distribution of these assets to brokerages and other institutional investors. 

Plan an emergency fund 

Three to six months of expenses can be cover by emergency funds. Furthermore, emergency fund should offer a margin of safety that will allow you to hold on to your current portfolio assets and give you the cushion you need to ride out volatility. 

Amid the pandemic of COVID-19, liquidity strategy can help to cover anywhere from two to five years’ worth of expenses, depending on what your needs are. Generally, liquidity strategy should be sufficiently sized to provide the cash flow you need during a bear market so you won’t have to sell equities or significantly change your goals and objectives during a downturn. 

Do not be panicked 

In crisis times such as COVID-19, it can be a stressful moment and these situations make it easy to panic. Emotions can often take over during these times and sell will be down even the market is declining as worries that current investments will become depleted. 

Keep away from instinct conclusion 

During the declining markets, it often gives a potential investments opportunity. At this time, you must stick with your long-term investment strategy and position yourself to capitalise on them for the future. 

Focus on direction 

Plan for every stage of your financial journey as market are unpredictable. The planning can help you manage anxiety time with a clear head and give you confidence that you’ve made the right decisions. With a little bit of planning, you can create a lasting strategy that can help meet your needs. 

It takes weeks to establish and setup a connection with a liquidity provider. Therefore, it is imperative to thoroughly examine your needs and evaluate how your liquidity provider can respond to and satisfy those needs. 

But with a liquidity strategy in place, you can help mitigate risk and today’s monetary issues are experiencing by almost all countries. A report by McKinsey on March 25, the gross domestic products of the developed economies will experience negative growth, with the recession expected to continue until next year at least. 

To get started, contact Doo Clearing’s Specialist team today for an insightful preview of how we can bring your brokerage to the next level. 

London office 

Tel: +44 2071128722 

Email: [email protected] 

Website: www.dooclearing.co.uk 

Hong Kong office 

Tel: +852 95612013 

Email: [email protected]