How many volatility methods are there in the foreign exchange market? There are five types of volatility, including rising volatility, falling volatility, low volatility, median volatility, and high volatility. Each market has its own trading techniques for volatility. In fact, there are similarities and slight differences. The shocking market basically refers to the state where both the long and the short are evenly matched. The characteristic of this trend is that there is no obvious rise or fall between the two parties, so it is very difficult for investors to operate.
Although there are similarities and differences, as long as there is a little abnormality, it will affect investors’ judgment of trading timing. Therefore, when there is a shock in different market positions, investors take different measures and operating methods.
Shocks in the foreign exchange market
The first type: rising shocks. By studying the trend of foreign exchange, it can be found that some foreign exchanges are operating in a regular upward channel, so investors can draw the upward channel of the stock, and sell it when the exchange rate runs to the upward pressure of the upward channel; run to the downward spiral of the upward channel When it is supported, just buy; the second type: falling and oscillating, when the exchange rate is running into a downward channel, investors are better not to operate. If you need to pay attention to the operation: do not buy when the exchange rate is extremely oversold, and sell on the edge of the falling channel; fast in and out; not excessively greedy, and take profits; choose small and medium cap stocks with large fluctuations.
The third type: low shocks. At this time, the exchange rate has entered a continuous decline and has continued for a period of time, and the trading volume is extremely shrinking. In this market, once the chips are shaken out, it is difficult to withdraw them. Therefore, investors can consider buying signals more, and would rather be trapped than take a short run. At the same time, if the low volatility increases, it indicates that the big market is about to occur.
The fourth type: median shock. At this time, although there has been a wave of rising prices, some foreign exchanges have not yet started, so it is the time to sell the foreign exchange with a larger increase, and it is the time to buy the foreign exchange that is about to rise.
The fifth type: high shock. At this time, the exchange rate has continued to rise and is in the final stage of rising, with great risks. However, because it is in the final stage of rising, the exchange rate has a larger amplitude and more opportunities. It is a high-risk and high-yield stage. If investors need to pay attention to the operation at this time: use short-term indicators; pay attention to whether the callback is in place when buying; pay attention to changes in short-term support lines and pressure lines; set stop loss points.
The biggest feature of a shock market is that there are no rules to follow. In this case, it is difficult for many technical tools and theories to give precise directions. Therefore, the difficulty of the transaction is greatly increased. Once the judgment is wrong, it is very likely to take a wrong step. A situation where a wrong step leads to a loss.
But on the other hand, the shock market also shows that there is no possibility of a sharp rise or fall in the market in the short term. Therefore, there are some operating techniques that are very suitable for a shock market. If used properly, it will be easy to do in this kind of market.
Five principles in the volatile foreign exchange market
Trading is a risky thing-basically, you have to carry out continuous risk management for each position you hold every day, or calculate the potential risk of a new position. Let us look at five principles that traders should follow when market volatility rises:
Understand the risks of each transaction. If you know all the possible opening and closing points, you know the expected return of each transaction, you can imagine each transaction and compare them. Traders should always respect the certainty factor, not take risks. When volatility rises, it usually means that you need to reduce leverage and position size.
Always use a stop loss so that you know the exact amount of risk you are willing to take before you open a position. Remember, “It’s not that the money you make makes you a successful trader, but that you lose less.” If you use a moving average to set your level, please consider using a long-term average to reduce the risk of high market volatility. Price spikes trigger your order.
You can also consider using a limit order to buy at a level slightly higher than the market price to reduce risk. In fact, you are expecting that the market will rise again, and you buy in accordance with the trend instead of going against the market.
It is also important to take a profit to close a limit order-a successful trader knows the upside potential of his order and at what price to close the position when he makes a profit. This eliminates emotional trading and does not limit your profitability-if you get a new signal, you can always reopen a position.
Stick to your plan
You should develop an effective, clear and tested strategy under all market conditions. This means that you will not ignore pre-set rules in a highly volatile market. Experienced traders should also have guidelines for basic risk events, such as central bank meetings and company performance announcements, which have historically been events that are prone to trigger high market volatility.
Market fluctuations can affect traders, causing them to quickly abandon their plans and patience. Never let wishful thinking-confirmation bias-distort your thinking. You must have the self-control to accept evidence and not react impulsively. Similarly, when traders make hasty decisions, they tend to consider recent returns—proximity bias—which may lead them to chase performance.
No matter how experienced a trader is, there is always room for improvement. This means you have to do your homework, whether it is when you are in trouble or when the transaction seems easy. It is indispensable to review your transaction progress continuously.
Summary: The volatile market is one of the most dangerous in the foreign exchange market. If you are not proficient in market operations, investors are advised not to participate easily. Although this market hides huge investment opportunities, the accompanying risks are also many. Everyone is doing various When operating a shock, you must set goals in advance and don’t fight to death.