Trading forex during volatile trading periods is a completely different animal than trading during normal market situations. Volatile trading hours generally happen around the opening of markets in New York and London and around major news events and announcements. The market at these times swings wildly up and down, making it much more likely for you to be stopped out of your position on the margin. This makes trading much riskier and usually isn’t for new traders.

However, the extra risk you take by trading during these hours can give you higher rewards if you manage your risk, positions, and stops correctly.

Proper risk management is the backbone of successful trading during volatile hours. Because the market swings wildly, you have a much greater chance of being stopped out of your position, especially if you are making large trades with high leverage. There are several things that you can do to successfully manage your risk. The best forex brokers will allow you to reduce the leverage that you trade with, which will reduce your risk. If you can’t reduce your leverage, you can also reduce the amount of lots that you normally trade to reduce your exposure to the market.

Another major part of mitigating your risk is managing your stops correctly. There are two schools of thought on this. One school believes you should make your stops wider to accommodate for wide swings in prices. The other school argues for tightened stops to reduce risk and catch the market before it goes down too far. You will have to decide which works best for your personal trading strategy, but if you are reducing your leverage and making smaller trades, wider stops can help to give you more room to play with.

During volatile trading hours, you should also be much more selective with your trades. Bad trades can turn terrible very quickly, so make sure that you are getting the trade you want.

Being selective requires that you have the charting tools and software that allows you to make decisions quickly. If you plan on trading during these hours, read forex broker reviews to find the best forex brokers in the market. Top forex brokers will have lighting quick executions, great charting tools, and up to the second information. Don’t try to trade without the information at your fingertips that you need to make good trades.

Finally, perhaps the most important part of trading during volatile periods is controlling your emotions. Even the best charting tools from top forex brokers won’t make up for a muddled mind caused by uncontrolled emotions. To be a successful volatility trader, you need to know how to deal with losses and gains equally well and know when the stop trading.

By following these simple tips and reading forex brokers reviews you should be well on the way to becoming a successful volatility trader in no time. No amount of theory in controlling your risk, emotions, stops, and trades is a substitute for real world experience however. If you are just starting to trade, open up a forex practice account and learn to trade with your practice account during volatile trading periods.
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