Home Forex EducationForex Basics High Volatility, Measures for dealing it.

High Volatility, Measures for dealing it.

by Ahsan Aslam Khan

Novice traders fear of high volatility in Forex market. Forex trading is a combination of high and low volatility. Adapting your trading strategy and approach according to the changing scenario of the Forex market is the key to profit in this field. Greater movement and shift in the price of currencies calls for immediate actions. You need to follow some easy steps to deal with high volatility.

Understanding Risk and stop Loss:

The first factor that helps you in surviving the sudden shift in price is the significance of risk taking in a trade. You cannot risk it all. After all, it is your hard earned money.  You have stop loss that can guide you in this regard. The right placement of stop loss can ensure minimum loss. You cannot just risk too much on weekends and stop loss will help you steer this time period.

Sizing the position in high volatility:

You need to size your position according to the amount of your capital. This strategy serves as a foundation for profitable trade. A small amount as a margin can act as a shield against loss. If you act like a macho man and do not lessen your position size, you are actually dragging towards loss.

Technical Indicators:

Last but not the least; you must consider the vitality of technical indicators in successful trade. Professional traders highlight the significance of keeping a close watch on the volatility of the Forex market. Traders suggest the use of technical indicators for this purpose. There are two widely used and trusted indicators. The first one in this regard is Average True Range and the other one is Bollinger Bands. Average True Range exposes and analysis the 5 days price movement while Bollinger Bands shows the 20 day average price. After all, you cannot just sit with folded arms and do nothing during high volatile time period.

 

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