The forex market has recently undergone so many ups and downs due to the Russia-Ukraine war. While some traders made a lot of profits from the price fluctuations, others lost a considerable share of their capital. So, what can be done in such volatile times? Read More
Develop A Risk Profile
When the market turns volatile, your first priority should be to determine your risk tolerance capacity. Yes, volatility can indeed offer you huge returns, but it also has the potential to exhaust your trading account. Consequently, it is important to determine how much risk you can actually bear. Additionally, you can minimize your risk by starting with smaller capital with no or very little leverage if you are risk-averse. This will ensure that when the market turns in your favor, you can make some modest profits; if not, your losses are not so much that you can’t bear them. Thus, one can say there is nothing right or wrong in forex trading; it all depends upon your risk profile.
Make Your Trading Plans Based On The Present Time
Your next goal should be to design a solid forex risk management plan based on your observations and the data you collect. Your plan should offer you a versatile overview of the forex market, thus helping you to make effective decisions. Beginners often used to copy trades of other professional traders. However, copy trading platform is not for all; some might need a plan specific to their trading needs. For them, a trading journal is a suitable option where they can keep a record of both successful and unsuccessful trades. With the help of a trading journal, they can evaluate their actions and make changes timely to manage their forex trading risks.
Open A Demo Account
A demo account is an incredible way to try out your strategies and learn new trading skills in real-time market conditions. It is a risk-free account with no real money involved but offers you full access to all the features and capabilities of the trading platform. You can easily learn how to trade with a demo account without risking your real money. After you have practiced on the demo account, you can then go ahead with live trading on the same trading platform.
Focus On Major Trading Instruments
Although there are many FX pairs available in the forex market for trading, it is highly recommended that you adhere to major forex pairs in times of crisis. The reason is they remain quite stable during such volatile times. Even during the crisis, major forex currency pairs such as USD/EUR, USD/GBP and USD/JPY can offer you a significant amount of liquidity. Consequently, traders don’t face a problem in opening and closing positions as there is a constant demand and supply of these currencies available. Apart from this, economists and professional forex brokers always focus on news and events taking place in major economies of the world during the crisis. All this leads to informed trading decision-making.
Define Risk-Reward Ratio
Also, you need to determine your risk-reward ratio so that you can counteract your trading losses. It doesn’t matter if you have lost one dollar or a thousand; you are a loser. The question is how much time it will take to cover up the losses and make a profit. You can also compute the trade worth with the risk-reward ratio.
Keep Your Emotions Intact
During risky times, you can set a daily trading limit for yourself so that you do not expose yourself to any risky situation. Don’t be an emotional fool when trading forex. If you are losing money, you should take a break for some time to review your trades. Furthermore, if you are making money, you should know when to quit so that you can keep your profits. Hence, it is important for a trader to know when to call it a day. It’s a sign of a mature and disciplined trader, the two foremost qualities every trader should always have.
Also read : Five Useful Tips To Choose The Right Forex Broker
Trading can be tricky in crisis; however, if you go through the tips mentioned above, you will be able to trade safely. Moreover, disciplined traders can make profits and minimize losses in every trade they execute, irrespective of the crisis happening in the world.