With a current geopolitical uncertainty and a recent election of Trump, Forex market and Gold experience wild price fluctuations. These unpredictable swings can result in substantial losses, particularly for the beginners in trading.
In this article, I will share with you the essential trade management and risk management tips and secrets for dealing with extreme volatility in trading.
I will reveal proven strategies and techniques for avoiding losses and unexpected risks.
FUNDAMENTAL NEWS
First and foremost, pay attention to the news.
The main driver of high volatility on the markets are the news, especially the bad ones.
In normal times, high impact news events are relatively rare, while in times of uncertainty their frequency increases dramatically.
Such news may easily invalidate the best technical analysis setup: any powerful support or resistance level, strong price action or candle stick pattern can be easily overturned by the fundamentals.
Trump tariffs threats against Canada made USDCAD rise by 400 pips rapidly, while the change of rhetoric quickly returned the prices to previous levels.
Here is the best trade management strategy to follow.
Once you hold an active trade, monitor the news. If you see the impactful news that may affect the pair or instrument that you trade, immediately protect your position, moving stop loss to entry.
It will help you avoid losses if the market starts going against you.
Above is the long position on EURAUD. Seeing some negative news release, we immediately move stop loss to entry. That trade management strategy would help us to close the trade here with 0 loss.
LIMIT YOUR RISKS
Even constantly monitoring the news, you will not be able to protect yourself from all the surprising movements.
Sometimes your trades will quickly be closed in a loss.
Therefore, I strictly recommend measure a lot size for every trade that you take. Make sure that you risk no more than 1% of your trading account per trade. That risk management strategy will help you to minimize losses cased by the impactful, uncertain events in Forex and Gold trading.
GAP OPENINGS
The impactful events may also occur on weekend, while Forex market is closed. Such incidents can be the cause of huge gap openings.
If you hold an active trading position over the weekend, remember that your entire account can be easily blown with such gaps.
Imagine that you decided to buy EURUSD on Friday during the NY session and keep holding the position over the weekend.
A huge gap down opening would make you face huge losses, opening the market 125 pips below the entry level.
By the way, this day I received a dozen of messages from my followers that their accounts were blown with the opening gaps.
Follow this trade management strategy to avoid losses.
Always close your Gold and Forex trades before the market closes on the weekend. Reenter your trade if the market opens without gaps.
PATIENCE
If you see a significant price movement caused by some events, and you did not manage to catch it, let it go.
Jumping in such movements is very risky because quite ofter correctional movements will follow quickly.
It will be much safer and better to try to be involved in a trend continuation after a pullback.
Look what happened with Gold when Trump began a new trade war.
The price started to grow rapidly. However, even during such a sentiment, 500 pips pullback occurred, giving patient traders a safe entry point for the trade.
BEST TRADING STRATEGY
In the midst of geopolitical tensions and trade wars, the markets tend to rally or fall for the extended time periods.
The best trading strategies to use to get maximum from such movements are trend-following strategies.
While reversal, counter-trend trading might be extremely risky, providing a lot of false signals.
Trend trading may bring extraordinary profits.
These trading tips, risk management and trade management strategies and secrets are tailored for cutting and avoiding losses during dark times. Empower your strategy with this useful knowledge and good luck to you in trading high volatility on Gold and Forex.
