Depending on the strategy that you’re working with for a day, week, or month, volatility can be an advantage to your style. Just be sure to understand what’s at risk fully. A traditional market presents safe, logical price moves and gradual changes, but a volatile one does so in large, compelling rallies. You might even define the markets, at that time, as being more spontaneous than you’ve ever seen. Consider these steps to mastering volatility for a steady profit stream.
Don’t rush. Double test your strategy. Wait for clear signs that your analysis is absolutely right. If you leave things up to chance, you might certainly find the market going against you. This is the biggest danger within a volatile market. The way things seem isn’t always the way things turn out. Practice patience, above all else.
Confirm Your Entries and Exits
Only make an entry after you’ve done some research. Just consider it; if you woke up and haven’t even brushed your teeth, what you currently find in the market isn’t going to work in your favor. You have first to do some homework. The theories that you come up with on a whim rarely lead to a sense of gratification. Your money is on the line, so create a thorough entry-and-exit strategy. Only enter the market if your conditions are met.
Ask Yourself Why
Volatility, though experienced as random shifts and rallies, can be interpreted as logical-price actions at times. You just have to ask yourself why; look for answers in the short term. All volatile markets are short-term trends. Whether it’s a big news release or a change in how a company is doing business, determine the why behind the price moves you find.
Take Profits Fast and Cut Losses Faster
Pretty soon, you’ll find yourself in a streak of profits and faster than you might have expected. The trick, then, is to cut your losses immediately by taking your profits fast. The truth is that volatility is unpredictable. Your gains during this market condition aren’t expected to last long. For this very reason, grab your wins fast. Don’t look back or think twice. Just take that money while you can.