News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bullish
Wall Street
Bearish
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • $USDCHF is continuing to strengthen today, now trading above the 0.9300 level. The pair is currently at its highest point since last July after three weeks of continued strength, rising from 0.8900 in mid February to its current levels. $USD $CHF https://t.co/WCVGdCvLFq
  • Hey traders! Wrap up your week with a quick update on #NFP and more from @DailyFX Chief Strategist @JohnKicklighter 👇 https://t.co/zrOo2scbiE
  • US, EU said to reach deal to suspend Boeing-Airbus tariffs. $USD $EUR
  • #Silver hit a fresh one month low today. The precious metal is currently trading right around the 25.00 level, its lowest point since late January. $XAG $SLV https://t.co/DhVcp7ULYO
  • 🇷🇺 Inflation Rate YoY (FEB) Actual: 5.7% Expected: 5.5% Previous: 5.2% https://www.dailyfx.com/economic-calendar#2021-03-05
  • Forex Update: As of 15:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: 0.06% 🇨🇭CHF: -0.10% 🇯🇵JPY: -0.11% 🇦🇺AUD: -0.41% 🇳🇿NZD: -0.41% 🇬🇧GBP: -0.44% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/N9GeMoaLjM
  • Indices Update: As of 15:00, these are your best and worst performers based on the London trading schedule: FTSE 100: 0.24% Wall Street: 0.07% US 500: -0.34% France 40: -0.55% Germany 30: -0.67% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/XcycPxwwyi
  • Heads Up:🇷🇺 Inflation Rate YoY (FEB) due at 16:00 GMT (15min) Expected: 5.5% Previous: 5.2% https://www.dailyfx.com/economic-calendar#2021-03-05
  • US Indices are currently mixed, paring their earlier morning gains as the trading session advances. The Nasdaq continues to lead the decline. DOW +0.08% NDX -1.41% SPX -0.32% RUT -0.95% $DIA $QQQ $SPY $IWM
  • Rising bond yields keep the USD supported as market sentiment turns negative BTC/USD looking vulnerable to further downside pressure. Get your $btc market update from @HathornSabin here:https://t.co/XyrDPZ13N7 https://t.co/xVbeYd4DHh
Making Adjustments during Volatile Markets

Making Adjustments during Volatile Markets

Richard Krivo, Trading Instructor

Student’s Question:

Given the recent volatility in the financial markets, do you have any special thoughts on trading during volatile conditions?

Instructor’s Answer:

Great question…

Volatility in the currency markets can come in the form of a “planned event” such as an interest rate announcement or the NFP. In those examples we know exactly when to expect the potential volatility based on the dates and times that we see on the Economic Calendar. Volatility can also come to us at totally unexpected times such as the earthquake in New Zealand and, more recently, the earthquake, tsunami and resulting nuclear disaster in Japan.

While some traders abhor volatility and will sit on the sidelines, other traders will embrace the volatility. But, within that embrace, you will find them taking measures that insure extra caution.

Let’s face it, during times of market volatility, there exists the potential for gains and that certainly can be very tempting to a trader. However, anytime there is the potential for gain, there is the equal opportunity for loss. Trading definitely is a double edged sword and, as traders, we must always keep that in mind.

For those traders who do embrace the volatility, one of the most popular strategies is simply to reduce the amount that they normally trade. Our Money Management rule of thumb is to never have more than 5% of your trading account at risk at any one time. So, for a trader who has a $10,000 trading account that would mean that in “normal” market conditions, they could place $500 (5%) of their $10,000 at risk.

For example, if they are contemplating a trade that would require a 100 pip stop, under normal market conditions they could place a 5 lot trade and still be within the Money Management guidelines . In abnormal market conditions, where greater than normal volatility exists, they may cut their exposure on the trade down to 3 lots or perhaps even down to 1 lot.

In that manner they are still able to trade if they choose but without having the same amount of risk that they would take on in a normal trading scenario. It is prudent to exercise caution during times that are more volatile.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES