How to trade in the volatile market condition

Posted by Andrew Bezen on February 20th, 2017

The volatility in Forex market means the percentage of risk involved when exchanging foreign currencies. The increase in volatility depicts that the exchange rate can be spread over a large range of values. The high volatility also, says that the price of currency can change drastically over the short time period in any direction. The high volatility lets the traders see increase in trading opportunities. Also, the decrease in volatility means that the exchange rate does not change drastically but changes in a firm pace over a time period. The Forex market is huge so the things can change in the opposite way the traders assumed. When the market is volatile, the traders should be able to adjust their strategies according to the market changes. We will explain the ways to trade during the volatile market.

Be attentive before placing the trade

Actually, in the Forex market traders are tempted to place all the trades they see but it is not the way. Although it can be a human nature to get advantage of everything they see, it cannot be an appropriate act in the Forex market. Traders tend to take the advantage of the opportunities in the volatile market; they are tempted to place many numbers of trades. As traders, this temptation should be completely destroyed, since during volatile times losses are likely to be huge. Before you trade in the Forex market you should analyze the risk tolerance ratio. If a trader falls psychologically then there cannot be a way to bring him or her back to the field so you should be capable of bearing the risk psychologically and financially. To be precise be ready to take some heat of the financial market when you join the online forex trading community.

Try to use lower leverage

When the market is highly volatile the losses can be highly distressing. The traders should consider how the leverage will affect their trades in the average trading range of the volatile market. The traders should be mindful of the leverage rate which could affect their portfolio. During the normal market condition placing many positions is fine if you are hoping to make 50-100 pips. But during high volatility, you should think about the risk ratio. So if you use low leverage in online forex trading then you can’t open high volume trade in the market even though you want it. At that very moment you might think that if you had high leverage you would have made a huge amount of money but in reality chances are very low that you would make huge amount of money by taking excessive risk. So always try to trade with low leverage.

Be disciplined

Traders should definitely adhere to their predetermined strategies in any market condition. It is obvious that they will have predetermined strategies so they should be able to make use of it in any market condition.  During the volatile market time, the traders should use the restraint level. The traders should adhere to the stop, the contingency plan, and also risk management techniques without any failure. Once you know the risk level you will be able to control your loss if you are disciplined in the market. To be honest there is nothing wrong to take managed losses in online forex trading. If you look at the professional trader then you will see they even have many consecutive losing orders in the market. But they always remain disciplined and trade with proper risk management factors. So always follow proper risk management factors before you take any trade in the market.

Summary: in the art of Forex if you sketch the drawing beforehand then you will be able to create the most wonderful picture. As traders, you should know to deal the volatile market as well as the normal market. Every single thing regarding volatile market should be analyzed and studied perfectly.  If you have the thorough knowledge in dealing the volatile market you will not exit Forex, if you did not know to handle then there is a huge risk associated. The foreign exchange market is not the steady market forever it has the nature of the changing market, so you should be able to change accordingly.