Market volatility is the fluctuation of the rate of any currency pair within a given duration. When a market becomes highly volatile, the currency pairs start moving at a higher rate. Forex trading produces a high level of volatility within time, which can reach about 30%. Besides, the volatility can also generate a steep price during the time.
How can you trade when the market volatility is so high?
If a Forex trader wants to continue his trading during a volatile period, he should stick to his established Forex trading strategy. It is crucial to adhere to your techniques to deal with the market and price in this volatile duration. Remember that the price movement is so sharp that the retailers quickly become confused about their decision during high volatility. In this case, he must abide by his strategies and should stand firm. Even a slight emotional idea shouldn’t interfere you’re your decisions.
As a retailer, you must reduce and control all the risks exposure and should follow the risk management techniques. Otherwise, the pressure will get intensified under the market condition. During this time, you should strictly control yourself and work in a disciplined manner. A single wrong decision can result in serious losses. Some of the retail UK traders often ask what areoptions in trading. Do you think they can earn money in this sector? To become a profitable trader, you must gain knowledge.
To struggle and overcome the situation, a trader has to concentrate on the major elements of his Forex trading techniques. He should observe his money management ideas, contingency plans as well as risk management tricks. For instance, it will be a better choice to use relatively tighter stops in this period to minimize his financial losses.
In addition to this, in this period, it will be a smart decision to not take a risk over 1% because taking a bigger risk may cause casualties at any time. However, even taking a 1% risk, the traders can still win greater profit because of the sharp price movement.
1. Risk management
The most vital thing that a trader should pay attention during volatile period is the risk. In fact, in any trading situation, a dealer must pay his attention to risks. If a trader is unable to manage the possible risks, it will cause some serious financial casualties. When investing money in a business, you must think of all the possible risks that may ruin your business.
2. Observe the trend
During the volatile period, the trend becomes very important, and a trader must observe the trend to make his progress. At this time, there are frequent changes in the trend because of the quick ups and downs of the price.
3. Greater time frames
It can be an interesting move. When you see that the market is getting volatile, simply move to the greater time frames. In this way, a trader can cut down his position size easily.
4. Avoid the news
Most traders often make a big mistake here. They turn on the news and focus on the headlines, which sometimes spread panic. You have to check the financial news, not the statements given by a politician. When a market starts moving too frequently, the trader won’t be able to analyze the chart properly. Even the most skilled analyst fails to analyze the market at that time.
Stop the account from being blown up
1. Check and use the guaranteed stops
There are some brokers who offer guaranteed stops. When it is about the price, the traders need to pay a greater amount of money on that trade. Using the guaranteed stops will provide you with solid protection against the “black swan”.
2. Lower leverage
Some brokers offer higher leverage, but a new trader shouldn’t go for them. Experienced traders don’t use more than 3. It will avoid the net loss of the account.
During a sudden movement in price, a retailer must make his move carefully because, in this period, lots of dealers lose their investment in Forex.