Everything in this world is cyclical including Forex. With the onset of the COVID-19 epidemic, the market entered a stage of high volatility. Traders had to adapt to the new conditions. Those who chose to stick with the old plan were unable to take advantage of the various opportunities of a highly volatile market. Others started losing money. Some jumped abruptly to a completely new strategy which also led to losses.
During the economic crisis, Forex offers significantly more chances for high earnings. Your task is to use them wisely.
Strategies of Cautious Traders
Changes for these market participants were mild. They still prefer low frequency trading and don’t engage in clearly risky trades. These are patient traders who can wait for the most sure trade to make sure they barely risk their funds. They prefer not to increase the volume of transactions for profit growth and adhere to their risk management system even in times of crisis.
This is a pretty wise decision given the potential for capital loss. However, with this approach, profit growth for cautious traders in a volatile market will be negligible. If you want to get the most out of the crisis then you should consider changing your approach.
Risk Trading
High volatility implies a proportional increase in risk and reward. If you are determined to significantly increase your capital during the crisis, consider a more daring approach to trading. More risky traders make decisions that can bring maximum profit:
- Choose trading instruments with the highest volatility
- Trade on low timeframes where price fluctuations are much higher
- Prefer high-frequency trading
- Use riskier strategies
This approach seems a bit insane but during a crisis daring traders can make thousands of dollars in half a day.
How Risk Traders Trade
During times of high volatility, the market behaves like a bouncing ball thrown down the stairs. It jumps down and bounces off the steps over and over again. Every fall and bounce are quite pronounced on the chart. Therefore, you have various opportunities for significant earnings in trading both on major trends and on pullbacks.
To make a substantial profit, you need to seize every opportunity. You will have to spend a lot of time in front of the charts in order not to miss frequent price reversals. Alternatively, you can use the helpers:
- Set pending orders that will be triggered at the right time even without your participation.
- Use special trading robots that will send you sound signals when the price reaches a certain level. So you will open charts in time to check the status of open trades or enter new ones.
If moderate risk is still your priority then you should stick to your old tactics. However, if you are aiming for high earnings, take advantage of the opportunities that the market opens up during periods of high volatility. Continue to control your lot size and only enter the trades with confirmed signals but don't miss out on the opportunities currently available to high frequency traders.