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How to Trade in Volatile Markets

Sunday, 16 April 2017
2016 was predicted to be an exciting year for traders. With the FED raising rates, the ECB continuing to print money, China’s stocks plunging and emerging economies wanting to take the front page of newspapers, everyone who wants to trade can expect volatility. Fundamental analysist have never had such a wide variety of mixed opinions, while technical analysist see their carefully placed levels and stops thrown to bits day-in and day-out. No matter what your trading instrument is, you need to buckle up.

There are a few main ideas which you can use to ensure that you take advantage of volatility and stay on the winning end of it and not get sucked into picking tops and bottoms. Here are the ones we think are best:

1. Time your entries better. The entry point is all the more important if you see a chart going all over the place. Careful with support and resistance lines and try to keep up with the overall trend.

2. Patience is key. Don’t panic if you see price go a few points against you in these times. Trades are not expected go to easy from beginning to end so be prepared for wild swings. Remember you plan and the reasons for which you entered.

3. Stop loss is a must. Because of the wild swings, never set a trade without a stop loss. You should follow this rule all the time, but it is even more crucial during volatile times.

4. Let your profits run. Due to the nature of volatile market, you can never accurately predict how long a certain impulse will last. If you’re in a winning position, secure a part of your winnings or at least be sure to breakeven, while letting your profits roll.

5. You are not your results. One losing day does not make you a bad trader. Especially in volatile markets. There will be people who win and people who lose every single day. Learn to take both wins and losses along with their lessons, but don’t take them personally. You are not your trading record.

If you keep these small pieces of advice in mind while trading, we are sure that you can manage to overcome even the hardest markets. At the end, you know very well there is no winning formula in trading. It all requires hard work, and sometimes this work has to take place in less-than-ideal conditions.

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