Top Trading Lessons: Trade More of What Is in Play, Less of What Isn’t

2020 was filled with extremely high levels of volatility across just about every asset class. The S&P 500 had one of its most volatile years on record, the WTI crude oil front-month contract went negative at one point, and so on. And while there was a good bit of volatility in FX, it didn’t reach the kind of extremes seen in other major markets.

It wasn’t a great year for FX trading, especially in developed currencies such as JPY. The mistake I made this past year, after March, was expecting developed FX to be more volatile, and as a result I gave it more attention than what it deserved when other asset classes, namely equities and commodities, were the place to be for volatility. As a vol-seeking trader I could have placed greater emphasis on those markets while having less FX exposure.

Good FX trading will arrive again at some point, but until it does you have to take it for what it is and stay focused on what is moving now, not what you hope will start moving. Be prepared for things to move, but don’t expect them to.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX