When the market gets very volatile and prices move like loonies, an opportunity is made to get richer (or poorer if you so prefer). These volatile moments are the best for me, the price movement can be compared to a maniac on cocaine overdose. For most other experienced traders, these are good times as well. Market volatility usually happens when two market times collide. I have come to trust these market time collisions somewhere around the middle of the week. This is where the money is! But be warned that this period is also very risky. Remember to set stop losses. Think of setting stop losses first before take profits. I can’t be sure if you love volatile markets as well but if you don’t, I will show you how I trade them.
Keeping trading strategies simple is key. I have seen lots of trade charts that got me scared. Lots of diagrams, drawings, symbols, etc. Most of the times these come from self-proclaimed experts. If that’s the case, then I’m nowhere near being an expert because I keep my charts very clean, only using a couple of indicators to trade. Actually this is how my charts look like: just two moving averages, stochastic oscillators and a cross-hair pointer — Simple.
Lots of indicators on charts clog up your brain, creating chaos. You don’t want to do that in a highly volatile market. There’s no time! Just get the few indicators you trust and know how to use and work your way through making some cash.
To make money in a volatile market, you have to learn to scalp. Scalping is a trading strategy that specialises in taking profits on small price changes, generally soon after a trade has been entered and has become profitable. Usually within 20 seconds to, say, about 120 seconds. You need to have a strict exit strategy, whether or not you have made the expected profit or not, once you’ve made about 10 or so pips, just get the hell out! (And repeat again and again and again till the market starts to consolidate). The number of pips you want to win actually depends on you and how you’ve planned your strategy (which most people don’t have and even if they have, don’t follow). But bear in mind this is how I personally trade volatile markets.
Spotting signals can’t be left unmentioned. You should be able to use your indicators to help you make decisions and the reason I wrote that lots of items on the chart is useless is because in a highly active market, there just is no room to check all diagrams, trying to find a positive signal before entering a trade. Unless you’re trading long-term, in which case, you should stop reading this post and go lie on the beach. I don’t see why you would want to trade a volatile market if you’re a long-term forex trader. There are lots of signals you can find in candlestick charts to find entry points. In my chart up above, I have circled a couple hammers and other signals. In the coming weeks, I will write about all candlestick signals that will make you some money. So don’t forget to like my Facebook page so you don’t miss out.
One last thing is the timeframe. The timeframe when trading a vigorous market is very important. They let you sort of zoom in and out of how the prices are moving. I use the 15-minute timeframe which works very well. You can set this up when you’re entering the “maniac” mode. I find the 5-minute frame to be quite deceptive as far as signal conformity from candlesticks and other indicators are concerned.
Trading an active market isn’t rocket science if you keep things simple and learn a bit more about candlesticks. You just need some dedication and time to learn the ins and outs and you should be making a decent income from home just trading the forex market in the middle of the week. A lot of people live this way.
If you have some suggestions, send me an email at 24forexsecrets[at]gmail.com Or share your thoughts in the comments section. I would be glad to read what you think.