How FX and CFD traders can manage Volatility


managing volatility

The following guest post is courtesy of Jens Chrzanowski, Member of  the Management Board of Admiral Markets Group AS.

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Hello,

Jens Chrzanowski Admiral Markets
Jens Chrzanowski, Admiral Markets

A couple of weeks ago, I wrote about “vola” still being your friend, and if you agree to this statement being an active trader, join me in having a closer look at how to manage it. Indeed, volatility can be managed with some of your broker’s innovative account settings!

Volatility is every Forex & CFD trader’s pet peeves because leveraged trading is not a long-term investment. You like to see movement, up and down, as long as you trade in the right direction – long or short.

At times, volatility can be too much, too risky for your personal trading style. Hot market news, gaps, and other issues can turn against you. That’s what volatility protection settings are made for!

How does it work?

These settings are available for all of our MT4 and MT5 account types and can be managed on our client portal (where you can also manage other settings, e.g., opening demo accounts, deposits and withdrawals, changing the leverage, etc.).

Some of the hottest features we will be focussing on are:

Execution of Stop and Market Orders as Limit Orders with Predefined Maximum Slippage

  • Possibility to enter the market with a limited risk and potentially unlimited additional gains.

Execution of Stop and Market Orders as limit orders with predefined maximum slippage gif

Predefine the maximum acceptable slippage from 1 to 1,000 points per account on the Account Settings page in your Trader’s Room. When a stop order is triggered or a market order is requested, a limit order is instead placed at the price that is less favourable by a predefined amount of points.

Such limit order is placed, in fact, under the terms when it is immediately triggered, so it can be only executed with positive or zero slippage, or otherwise just cancelled. Therefore, the maximum slippage of the original stop or market order is limited to a predefined amount of points, while the positive slippage of the resulting limit order can be unlimited.

  • Applicable order types: Buy Stop, Sell Stop, Buy by Market, Sell by Market.

Cancellation of Pending Orders on Price Gaps

  • Protects you from instant losses that are otherwise possible if your pending order has a predefined stop-loss level and they are both triggered on the same tick.

Enable these settings on the Account Settings page in your Trader’s Room to automatically cancel pending orders if they have stop-losses or take-profits triggered on the same price tick.

  • Applicable order types: Buy Stop, Sell Stop, Buy Limit, Sell Limit

Cancellation of Stop Orders with Trigger Prices Exceeding Predefined Maximum Slippage

  • Possibility to minimise market risk associated with stop orders.

Predefine the maximum acceptable slippage from 1 to 1,000 points per account on the Account Settings page of your Trader’s Room. When a stop order is triggered at the price exceeding the predefined limit, the stop order is cancelled.

  • Applicable order types: Buy Stop, Sell Stop

cancellation stop orders

Market Execution of Limit Orders

  • Helps avoid scenarios when a limit order (e.g., a take-profit order) is reached on a price spike and not executed due to the absence of liquidity beyond that level.

Enable these settings on the Account Settings page in your Trader’s Room to execute limit orders as market orders, which means that once your limit order is triggered, a market order is issued instead.

Note: In this case, a market order issued instead of a limit order can be executed with slippage in any direction, contrary to the original limit order.

  • Applicable order types: Buy Limit, Sell Limit, Take-Profit 

market exec limit orders

Find out more about the settings and the advanced volatility protection options on our website, where they come with detailed descriptions, e.g., Partial Execution of Limit Orders and Slippage Recording.

The best part is that they are also available for demo accounts. Try it out!

See you next week!


Do you have any feedback, concerns, requests, maybe even compliments? I’d love to hear them. Please contact me via: [email protected]

Trading on margin carries a high level of risk, and this article should not be seen as advice or solicitation to buy or sell, but written for informational purposes.

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How FX and CFD traders can manage Volatility

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