High To Trade High Volatile Conditions In The Forex Market

Discussion in 'Forex - Currencies Forums' started by Adam Smith, Feb 16, 2017.

  1. Adam Smith

    Adam Smith Active Member

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    The financial market is considered to be the most volatile market in today’s world. Every single day more than 4.5 trillion dollars is traded in this market. Previously forex trading was only limited to the large banks and institutions but now it is free for all group of people. If you have the basic identity document and a little amount of money than you can actively trade different financial instrument in the world. If you see the success rate in the forex market then you will be surprised to see that most of the traders in the financial market is failing to make a consistent profit out of trading the financial instrument. Out of every 100 trades, only 5-6 percent are making a consistent profit. In order to make a profit by trading the financial instrument in the world, you need to have a very strong knowledge about the financial sectors. If you look at the CFD trading community than you will notice all the successful traders are highly trained and motivated to trade the dynamics of this market. In this article, we will discuss how to trade the high volatile conditions in the market.


    Reduce your lot size: The forex market can be extremely volatile during the event of the high impact news release. Most of the time the market often exhibit large false spike prior to the high impact news release. All the professional traders are well aware of the timings of the fundamental news release in the market. Before the news release, they always trade with low size since they know the market will exhibit wild moves after the news release. Most of the novice traders tend to use a tight stop loss in their robust trading platform but this will not save them from huge losses all the time. Sometimes the traders will get large slippage in their trade execution in the market. So first of know the exact time of the news release in the market and identify the assets which will have the maximum impact of that news release. After doing all this you should trade with smaller lot size in order to reduce the risk exposure in the market.


    Use higher time frame: Due to advancement in technology, the traders have access to wide range of the trading instrument in CFD trading. Most of the novice traders tend to trade much different currency pairs at a time but this simply increases the potential risk exposure in the market. Since the market become extremely volatile prior to news release all the professional traders use the higher time frame in the market to trade the news. If you are relatively new in forex trading then you should draw the key support and resistance level in the higher time frame and set pending orders at the majors’ level. Due to the extremely volatile conditions of the market, it sometimes becomes extremely hard for the traders to execute their trade in the market in real time situation. In order to avoid such problems in the market, the professional traders often use the pending features in the market to execute high-quality trades during the news at the key support and resistance level. But while trading the news make sure that you always trade in favor of the long-term prevailing trend since it will greatly enhance your winning edge in the market.


    Avoid the press conference or political speech: Most of the novice traders thinks that every volatile condition is an opportunity to make money in CFD trading. But in reality, this is not simple as that. During press conference or political speech, the market tends to exhibit lots of false spike and the new traders often blow their trading account while trading this type of volatility in the market. All the professional traders in the forex market always avoid such press conference and political speeches. They simply wait in the sideline and wait patiently for the dust to settle down in the market. Once the market becomes little bit stable they look for price action confirmation signal to trade the key support and resistance level in favor the long-term prevailing trend. But before executing any orders in the market always do the fundamental analysis and try to identify if there is any potential trend reversal in the market.


    In summary, High volatility can be cured and blessings for the traders. All the professional traders in the forex market consider high volatility as a golden opportunity to make money. On the contrary, most of the novice traders fail to make money while trading the volatile conditions. Always reduces your risk exposure level prior to news trading and look for potential price action signal in the higher time frame. If you want to trade in the conservative way than wait for the market to stabilize and after that look for potential price action signal to execute your orders in the market.
     
  2. longtermbull

    longtermbull Administrator Staff Member

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    In summary - pick your fights. Nice article by the way.

    Currencies, like stocks, can over react on the upside and the downside to pending news and actual news - patience is a virtue.
     
  3. radex78

    radex78 Senior Investor

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    Nice article, working in dynamic market condition that sometime unpredictable indeed need more patience in trading and keep trade with proper money management, using lowest lot size will prevent from big loss and increasing opportunity also.
     
  4. longtermbull

    longtermbull Administrator Staff Member

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    Run your winners and ditch your losers.....
     
  5. radex78

    radex78 Senior Investor

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    We all want to become winner, but not simpler like as on theory,
    slow steady to winning the race, work on high volatile market if greed usually will killing account shortly, but trade low risk smallest lots size will longer life and more comfortable in trading long term plan
     
  6. ciao

    ciao Senior Investor

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    IMO all depend what strategy one use .... I like volatility - quick mover for a quick scalp ..
    Rome wasn't build in one day .... therefore my centss make a lump of $$$ at the year end ;):D:D
    I don't trade Forex therefore my mentioning is on stocks
    take care
     
  7. radex78

    radex78 Senior Investor

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    I am not trade on stocks, never because capital that required I am ever hear is higher than forex which only with ten dollar already can trying on real account
    if you trade on stocks what broker that used just curious I want to know
     
  8. radex78

    radex78 Senior Investor

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    On 7 may ahead will there are second round election on france, there are some broker that already announced will adjusted margin requirement might increase until 5 times and might will occured wider spread on 3rd may till 9th may
     
  9. kirtimeliwal

    kirtimeliwal Senior Investor

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    Volatility is the tendency of a market to rise or fall within a short period of time. In volatile times, many investors get penic and begin to question their investment strategies but the main thing to realize is that market volatility is inevitable. It's the nature of the markets to move up and down over the short-term. We can adopt one solution is to maintain a long-term horizon by following amrt techniques and can ignore the short-term fluctuations.
     
  10. gowiththeflow

    gowiththeflow Senior Investor

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    That is very true about volatility BUT markets tend to be something of an information exchange - information in the public domain and "inside" information. So while I agree about taking a long term view, do not discount short term movements as a potential warning that things may be changing.
     

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