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.

Free Trading Guides
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Oil - US Crude
Mixed
Bitcoin
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • #NZDUSD drops after 2 year inflation expectations come in at 1.80%, lower than the previous 1.86% print. #RBNZ rate decision up in less than 24 hours https://t.co/EzKvnaxaka
  • Reserve Bank of New Zealand 2-Year Inflation Expectation (4Q) Actual: 1.80% Previous: 1.86% $NZDUSD #RBNZ
  • Join @IlyaSpivak 's #webinar at 10:00 PM ET/3:00 AM GMT to prepare for the week ahead in trading the $AUDUSD Register here: https://t.co/sZNWPVRHA0 https://t.co/mED7ojharu
  • Heads up: New Zealand Reserve Bank of New England 2-Year Inflation Expectation (4Q) is due at 2:00 GMT (15 min) Est: N/A Previous: 1.86%
  • Crude #oil prices, $NOK and $SEK may rise if Donald Trump’s speech on trade war developments amplifies market buoyancy against the backdrop of critical US CPI and retails sales data. Get your market update from @ZabelinDimitri here:https://t.co/5rdK7xsQNq https://t.co/p1keAYO2ci
  • Since late July, the economic news flow from Sweden has been under-performing relative to economists’ expectations however there has been some improvement since early October. -Citi #SEK
  • The NZD marked a bearish reversal off key resistance last week and the focus is on confluence support just above the 63-handle. Get your NZD/USD market update here: https://t.co/WHaeLKR5Tv https://t.co/C9Jq94Udjo
  • What is a CLO you might ask? https://www.dailyfx.com/forex/fundamental/article/special_report/2019/03/22/Currencies-May-See-Wild-Swings-if-Slow-Growth-Breaks-CLO-Market.html https://t.co/s3ENjvMPWJ
  • Overnight index swaps are pricing in an 66.3% probability of a RBNZ rate cut during its next meeting on 11/13/2019 #NZD
  • (Asia Pacific AM Briefing) GBP/USD Price Aims for October High as NZD/USD Rate Soars $GBPUSD $NZDUSD #Brexit #RBNZ - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2019/11/12/GBPUSD-Price-Aims-for-October-High-as-NZDUSD-Rate-Soars.html?CHID=9&QPID=917702 https://t.co/vXSDQ6WgBW
Trading Volatile Markets

Trading Volatile Markets

2011-03-16 01:08:00
Richard Krivo, Trading Instructor
Share:

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

News & Analysis at your fingertips.