Home Trading Strategies How To Trade High Volatility Markets (In 2020)

How To Trade High Volatility Markets (In 2020)

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How To Trade High Volatility Markets (In 2020)

hey hey what’s up my friend so in today’s episode I want to talk about how do you treat high volatility markets because right now you know with the kovat virus around the world a lot of markets right their volatility have spiked up tremendously so how do you handle such volatility in the markets how do you treat in such market conditions especially for those of you who are new to trading right maybe over the last you know one year you have just started trading this is a market scenario that you’re very unfamiliar with right so the first thing that I want you to know is that your stop-loss right has to be wider you cannot be using a fixed stop-loss right for current market conditions let’s say for example euro dollar about one year ago the daily range of euro dollar is about 50 pips right now if you look at a chance right euro dollar swings anywhere from hundred twenty hundred three hundred 40 pips at D so you can see that if you use a fixed stop-loss right then you’ve been using all along you’ll find it you get stopped out of your treat very often likewise for the S&P 500 right about one year ago it makes an average about 50 points a day right now the SMP from what I last check or I can move in 150 160 points in a day it limits up and down right on quite a number of days in a row so you can see that volatility right now has increased tremendously and if you are still using that same tiny stop-loss that you’ve been using all along you’re asking for trouble you will find yourself getting stopped up over and over again and wondering what the beep is going on right that’s because volatility of the market has changed and your stop-loss should be dynamic in the sense that it should take into account any current volatility of the markets as well number two right with increased size of your stop-loss stop-loss or any unless you say your position size should be reduced accordingly for example if you have a hundred pit stop loss and you trade with let’s say one lot right for example right now if your stop-loss has been increased to let’s say four hundred pips right then you can be still trading there 1 lakh because your losses now is going to be larger if you stick to that same lot size so what you to do is to reduce it accordingly to maybe let’s say if you’re trading with a foreigner people stop-loss right your lot size now should be about 2.

5 million Lots right – to compensate right the increase in volatility right so reduce your position size accordingly right when you’re applause gets wider so this way when you take a loss right it’s still pretty much of similar percentage right to what you’ve been doing previously number three right don’t chase the market sir I know in high-volatility environment it might seem very easy to to make profits because the market is just moving in one direction look at how bearish the candle is if it’s just shorter I can just get a small bite out of the market all right look how bullish the market is if I just buy could just get a quick 30 pips cup out of the markets all right the problem with chasing a market is that when you reverse right the reversal is equally swift to down to the downside and when you’re chasing the market there’s no logical place for you to send your stop loss or if you don’t believe me just look at those charts that have gone parabolic you know oil you know the Aussies restraint whatsoever you’ll notice that the nearest market structure is pretty done far away this means when the pullback comes it can be very sweet right against you right looking for the next market structure like for example looking for the next previous resistance that could become support it’s pretty damn far away okay so if you’re chasing the markets there’s no logical place for you to set your stop loss and when you get when you experience the pullback right likelihood you will get stopped up off your trade right so don’t chase the markets and number four drink high volatility market environment market moves really fast so this is where you want to be selective right and if you’re on a trade right trade only from key levels right key price levels this could be the key support resistance multi-year highs multi-year lows this is where the market is likely to find a reaction from it right and you can actually establish trades right and this key market level alternatively right what you can do is you can also wait for the market to consolidate to form a build-up right before making the next wave of the move so for example let’s say the market has broke out and uh an all-time highs you don’t be chasing the market so what you should do instead is to let the market consolidate let the 20ma catch up with the price right by the time the 20ma has caught up with a price the price would have consolidate for a long I’m guessing maybe ten candles 15 candles forming something like a bull flag pattern now when the bull flag patter is former and then you can look to buy the next wave of the breakout maybe just using a buy stop order above the previous high then your stop-loss can just go 180 are below the low of the so this way right you have a level right there you know where you can enter and where to define your is right should you be wrong which is just a little loose of the blue flag so can you see that no by by trading from key levels by letting the market right consolidate further you would better manage your your wreath right in such high-volatility environment and finally the last thing that I want to share with you is they’re in such market condition if you are uncomfortable if you do not what but what what’s going on right and you are just confused just stay off the markets you can just have no position right you can just hold on to cash because no position is a position itself you don’t have to force the trade in market conditions that you’re not comfortable with you don’t have to force the trade right when you don’t know what you are doing you don’t have to force a trade in a high volatility market environment stay on the cash right let the dust settles and when things become clear to you okay then you can look to trade the markets again the market will be around the next five or ten years right don’t lose it all during this high-volatility environment because you think that oh I need to do something more such market conditions because there is right no position is a position itself ignore what’s going on out there the media the social media know how much money people are making that’s irrelevant to you that’s noise to you if you do not know what’s going on right now stay on the cash because cash is a position in in itself stay safe my friend and I will talk to you soon you

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