Trade at the time of increased volatility. Is it worth it?

Trade at the time of increased volatility. Is it worth it?

The trading strategy of stock speculators should not only describe the methodology for analyzing and forecasting a financial asset, but also include the moments at which fix api trading should be conducted and those nuances when one should keep from opening speculative positions. And we are not talking now about the timeframe or the time of the trading session. It is about more point moments. Thus, about trading when certain news releases or opening positions, when there are unforeseen factors that cause increased fluctuations in the market.

Even if your trading strategy is based on news trading, this already indicates that you know in advance what to expect and how to trade. Well, what about the situations when the movement in the market is provoked by unforeseen factors? Should I trade? Today, we will try to find the answer to this question.

In order to understand this issue in more details, I suggest to start with considering the key characteristics of fix api trading at a time of increased volatility:

  • Situations where the value of a currency pair is more than 100 points in one trading hour can be considered as an increased market volatility of the fix api forex. Then, it is worthwhile to predict whether the pullback of quotations or the potential for growth/decline has not yet been exhausted.
  • Spread expansion. Since there is uncertainty in the market, part of the players simultaneously sells and buys increased volumes, which expands the price between the purchase price and the asset sale. Thus, the quotes for various fix api forex brokers may differ.
  • Price noise in both sides of the traffic. Again, if the news came out without market expectations, traders have a small fraction of a second to analyze the current trend and predict the future value of the asset. Thus, the price can fluctuate both upward and downward for one-time interval, thereby closing the positions of traders at the stop loss levels.
  • Increased risks. It is not difficult to understand that when the movement is difficult to predict and retain, the risks are raised not only in terms of capital, but also directly in the probability of triggering a negative scenario.
  • It can be divided into expected and unexpected. As a rule, it is the latter that provoke higher volatility in the foreign exchange market.
  • High-frequency algorithms are used. To use the potential to generate additional profits, some of the players resort to using trade robots for this. HFT algorithms allow you to open a lot of trading operations on the basis of a speculative principle and thereby fix the minimum shares of profitability.

Given these factors, a certain scenario of work for a profitable trade is taking place:

1. Entry based on pending orders and their accompaniment. If we talk about manual trading, the trader needs to set the level for buying and selling on small timeframes, on local highs and lows. Then, if the quotes show a new high or low, it will be a signal to the fact that the potential has not yet been exhausted.

2. Determination of the risk level (Stop Loss) is calculated on the basis of the maximum risk on the deposit. It is unlikely that the exit principles from the levels or technical indicators will be used here. Therefore, you can set the exit threshold from the transaction by achieving a boundary risk.

3. Open a position or scalp ( ) on the asset movement at the time of volatility. The position, which the trader has opened, is possible either to accompany or to keep the risk/yield before the necessary parameters are achieved.

As you can see, trading at the time of increased volatility can be realized even in a separate trading strategy with specific entry and exit points. However, it is hard for the trader to perform such an algorithm, since the main profit potential will already pass before the fix api trader get a trade signal and conclude a deal. Therefore, I would recommend using certain HFT algorithms for this type of trading. This would allow you to control your trading strategy, which excludes the possibility of trading on illogical market movements, and use the algorithm to obtain additional yields ( )

Returning to the original question “is it worth it,” I can give a positive answer, but only if the necessary software is used.



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