How Experts are Profiting on Historical Volatility

Now Through December

How Experts, Profiting, Historical Volatility, Forex Strategy, fx trader, forex

This year has been a busy one for currency traders and for good reason; historically, we’ve had one of the largest volatility levels in quite some time all throughout 2015. Between eurozone news and U.S. Federal Reserve decisions, the market has been on a rollercoaster of movements expert traders have been cashing in on.

As hard as it is to believe, we’re already in the final quarter of the trading year. From past experience, this is where the experts start to shift their trading plans. Typically, the end of the year, minus the final two weeks of December, is when the currency world starts to see even higher volatility and some of the largest trading ranges it has seen all year.

But, this year has been a little different as far as market trends and daily trading ranges go, which consequently is leading traders to believe that the natural spike in volatility normally seen during the final few months of the year could be even more drastic in 2015.

What you need to know: With the increased volatility this year, there’s still a lot of pips to be paid out of this market, but the trading plans you used back in January and even July are not going to cut it.

Why? The annual cycle still holds true. The market movements and daily trading ranges tend to expand a bit more toward the end of the year, and experts are still expecting this normal increase to occur. With the market providing more opportunity, trading plans have to open up to allow for bigger waves and larger profit payouts.

Truly, the keys to profiting on this history-making volatility lies in three tactical trading tweaks that could keep you in the money, even throughout the increased volatility at the end of the year.

Key #1: Adjust Your Equity Management

This key is all about making sure that you stay in power in the market game.

I like to teach new traders that equity management is not quite what they think. A lot of times, when new traders think equity management, they’re overcome with negativity. The connotation is all crunching numbers, thinking about risk, and losing trades.

Now, is this sentiment wrong? Well, no. It is about all of those things, but what many traders are missing is that equity management is what gives them the true power to profit in this market.

Here’s what I mean:

One major realization about fourth quarter trading is that your lot sizes need to tighten as the market does - a key matter of your equity management plan. If you’re still trading the same lot sizes you were in the first quarter of 2015, chances are that your account is in grave danger of being blown up.

Check out Chart 1 of the EURNZD in January 2015.

How Experts, Profiting, Historical Volatility, Forex Strategy, fx trader, forex chart 1Chart 1: On January 16th, the market moved roughly 50 pips every two hours