Thursday, 16 March 2017
How to trade in highly volatile markets
From Trump tweets to general elections, these last few months have been pretty intense in global markets for big and small investors alike. New information is available every minute and everybody has instant access to it, which makes trading more volatile and difficult to track.
Many retail investors fear of volatility for several reasons. Unexpected turns in asset prices could either blow up your account or double it. To avoid unwanted moves in our balance, we have put together a simple list of facts that would help you keep calm no matter what.
Take profit / Stop loss orders
Whether you are a day trader or a farmer, everybody wants to sleep without worries at night. But as futures operate 24/5, we want to make money all around the clock. So who we do it without staying awake? We use take profit and stop loss orders to limit unexpected movements of the markets. Just set them everytime you open a new position and renew them later, as you see fit.
Stick to your strategy
We are not saying you should keep a stock for 50 years to make money. Nope. We understand the world is moving at a fast pace right now and we all wish instant result. However, waiting for the right time to buy or sell an asset is part of being successful overtime. When charts go crazy after a rate decision or a referendum, we (naturally) start panicking and that might cost us money (a lot of money). One of the best things you could do is to chill out and stick to your plan, after all that’s why you made a plan, right? Follow your strategy religiously and volatile markets will become less of a threat for your portfolio.
Keep track of execution
Sometimes it’s not our mind, but technology that plays against us and our money. Trading online has huge benefits but that doesn’t mean there is no downside to it. In volatile environments, trading sites usually are affected by strong traffic, which ultimately hits the performance of the site and execution of our orders. In case you pick up one of our accounts at Fort Financial Services, you will enjoy of fast execution under any circumstances. In other cases, make sure your broker provides with quality standards to make sure order execution is not delayed.
Don’t lose your temper
Believe it or not. Trading under difficult ground is a learning stage that you should pass sooner or later. So take it easy and enjoy it. We all experienced ups and downs but here we are, happy to trade each new day. The psychological factor is always a key issue when trading, especially when things start to go south (or north if you are seller). But once you learn how to control your mind and emotions, there are only opportunities ahead.
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