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The following guest post is courtesy of Jens Chrzanowski, Member of the Management Board of Admiral Markets Group AS.
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The summer is coming, which means market volatility will not be the highest. Still, you never know as some instruments may show big movements. This week, I will discuss how to use volatility and how to minimise volatility risks.
Volatility measures the speed and magnitude of quote changes, which can be so fast that the financial outcome of trading becomes unpredictable… Tools that help limit volatility risks are a must-have! Volatility can be your friend if the quotes go in a favourable direction, which will allow you to get profits fast, but proper risk management will get you ready for the worst case scenario.
Admiral Markets offers volatility protection settings to all clients with demo and live accounts. Having these account settings, a trader is able to limit maximum price/quote slippage in the market, stop orders, limit or even fully avoid losses on pending orders falling into price gaps, as well as avoid order activation due to spread widening in the absence of actual movement in the market.
Thus, every Forex and CFD trader should respect volatile trading price movements. That’s how you can make 50% profit a day, and more… Or lose 50%, or even more, a day if you don’t use proper risk management.
I believe that without price movements, the market would be dull. If there’s no volatility, like quite often in the summertime, it’s better to go to the beach and leave trading for later.
If you trade or hold open medium or long-term positions, think about risk management. Safeguards are not just for beaches!
See you next week!
Do you have feedback, concerns, requests, maybe even compliments? I’d love to hear. 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. It’s written for informational purposes only.