By We all know that the currency market is volatile. Then, we also know that this volatility is further intensified by the use of leverage by a lot of traders. If you’re going to compare it with other markets, such as the stock market or the commodities market, the currency market may be stable without leveraging. Now, you can survive the volatility in the Forex Review by simply following the tips we have below.
Know when to Escape
There are times when you find the market movements not making any sense, or illogical. This time, it will keep pulling you in, compelling you to hold on. You may be convinced that there will be a turnaround and you will be getting something bigger than what you are currently losing. However, you must keep in mind that those instances are usually traps. You’ll suddenly find your account balance depleted.
When all the odds are against you, it’s high time you step back and exit. You can try to leave the market alone for a while until it settles down. You can always have another chance, as long as you’re not totally wrecked by the volatility you experience.
Use Correct Stops
You need to pay special attention to the placing of stops in a volatile market. Generally, tight stops fail to work in an extremely volatile market. You will need to provide some wiggle room for your trades.
Otherwise, traders like you will be stopped by price whipsaws. If you’re already using the proper position size, you’ll find it okay to use a wide stop to let your trades breathe.
Lock in Gains
If you finally find the market moving to your advantage and you’re earnings are in your trade, do not think twice: adjust your stop and lock in some of your gains. You don’t have to be ashamed of getting stopped out for a gain, whether it’s large or small. When the market gets wild and out of control, you have to use all the tricks you have in hand. Locking your gains as many times as you can will give you reason to think, rightfully, that you have garnered more gains than losses.
Averaging Down
When you average down, you take another position to try to make your average entry price lower while you are losing a trade. This strategy is legitimate, which means that it can actually work, but only under specific conditions. Remember that it is a dangerously volatile market. Many traders around you will try to keep averaging down, expecting that the trade will turn at any moment.
What actually happens is that the losses will get bigger and bigger—even bigger than you can imagine—and your account will get blown up. Thus, averaging down is not really a great decision, as results usually lead to disasters.
Final Word
As a trader, you have to invest in yourself first. When the market shows volatility, you have to try to be conservative. Follow the rules of the Online Trading Platform road. Volatile markets with leverage can spell trouble for many, especially beginners. It’s better to play it safe until you’re experienced enough to better deal with such unpredictability.
Comments