InstaForex: How to stay ahead in quieter markets
The know hows on dealing with slower trading periods
Lulls in trading can present just as much challenges as periods of great movement and volatility. During quieter intervals however, ranges can be smaller due to the reduced volatility with many institutional traders away from their desks - what is the overall impact of this on your trading?
Firstly, markets are more susceptible to having patches of illiquidity with random moves taking out stops more readily on any lack of order flow. Consequently, these can result in some frustrating trading experiences.The below article delves into some useful tips to help you keep a level head during periods of stagnation or reduced volatility.
Be on the lookout for surprise events
Take a break
Willingness to reduce intraday targets
The importance of wider intraday stops
Don't sleep on changing market dynamics
has increased considerably over the last few years and this is resulting in a
key change. The algorithmic trading model involves the 'algos' being switched
on during the whole year; computers do not need a holiday.
Their short-term, constant day to day profit profiles means that they are going to be left running during the summer or slower months. Why is this important? Even though the large investors may have key staff on holiday or be away from their desks, the age of automation means that the trading of assets in FX goes on.
Technical levels are still in play
No matter what time of
year it is technical levels are never forgotten. The key moving averages are
always respected and that means you should do.
Key moving averages like the 50 MA, the 100 MA and the 200 MA will still
be respected so these should always be in the back of your mind.
By extension, Fibonacci retracement levels and horizontal support and resistance levels can still be relied upon.
Ranges deserve your attention
Much like technical
levels, trading ranges are also of supreme importance throughout the year. For example,
if there is a strong range in play, then it is more likely to hold during
slower trading periods.
Pay attention to tests of key levels and take a quick look at the news. Are there any key releases that are coming out? If there is not, then the chances of a well-established range holding are strong.
It could be a great location to trade a quick bounce off a key level. Similarly, if a key level looks like breaking during the summer months, and there is little in the way of significant market news, then that break may well be a false break. So, be aware of these two phenomena; strong ranges holding and false breakouts of key levels.
- This article was submitted by Instaforex.