Tips for forex options trading during low volatility
5 years ago forexsimulation 0
Trading can be extremely difficult if you don’t know how to trade the market properly. Those who are trading the financial instrument for a long period of time have undergone many difficult stages and after long perseverance, they have become a professional trader. The forex market is either trending or remains in a sideway. Those who are trend traders can find it extremely difficult to trade the market during the low volatility period. But if you truly want to become a professional forex options trader then you need to know how to trade the market even during the low volatility period. Most of the time the market tends to cease its movement when there is no major fundamental news release in the market. So what do the professional options traders do during the low volatility period? Do they trade or they simply stay on the sideline. The simple answer is they trade in a normal fashion. But in order to trade the low volatility period you need to know some important technique since it will help to make a decent profit even during the low volatile period. In this article, we will give you some tips to trade the options market with the great level of accuracy.
Use smaller time frame: If you are trading the forex options for a long period of time then you know that time period is extremely crucial for successful options trading. The moment you execute any call or put option trade in the market it comes with an expiry period. So during low volatility period, you can easily get confused with the timings since most of your analysis will be done in the higher time frame. All the professional forex options traders use the smaller time during the low volatility period since the smaller time frame act pretty much similar to the higher time during the low volatile period. Execute your trading orders in the market based on the smaller time frame data and use price action trading strategy to increase your winning percentage.
Trade in favor of the last prevailing trend: Most of the time the market remains in a sideway direction during the low volatility period. You might have heard the proverb that trend is your friend. So being a professional forex options trader you need to execute your orders in the market based on the last prevailing trend in the market. By doing so you will save yourself from the unexpected breakout in the market. Most of the breakout occurs in the direction of the long-term prevailing trend in the market. So if you execute your orders in the market based on the long-term prevailing trend then you don’t have to worry about the breakout since 90 percent of the time breakout will go in favor of your trade.
Look for the fundamental issue: During the low volatility period, there is no major economic event in the forex market. Fundamental factors are nothing but the price driving catalyst in the forex market. So if you execute any trade in the market based on technical analysis during the low volatility period most probably you will gain from the market. But you need to save yourself from the breakout and unexpected spikes of the market. In order to avoid those even take sure that you see the economic calendar and set up your trade in the market so that you don’t hurt by the false spike of the market.t
Don’t aim for large options trade: Most of the retail options traders target a distant price during the low vitality period since the reward is extremely high. But as a professional forex options trader, you must know why the reward is high in the distant options offered by the broker. The only reason is low volatility. Brokers know very well that during the low volatile conditions of the market it’s very unlikely that the price will move in a significant way since there is no major fundamental news releases don’t aim for high reward options trades in the market since most of the time the market prefers to maintain its sideways movement.
Taking an excessive risk: There are many traders who often ignores the power of risk management factors. But if you want to consider yourself as a full-time professional options trader then you need to trade the market with calculative risk. Most of the novice trader in the forex market thinks that they can take the huge risk since there is no volatility at all in the market. But as a professional trader, you should always follow proper risk management factors regardless of the market conditions. Don’t let your emotions to control you rather use your logic and calculate your potential risk reward ratio before you execute any orders in the market.
Summary: Forex options trading can be extremely profitable if you know how to trade the market properly. In this article, we have shared some amazing tips how to trade the market profitable in the low volatility period. So if you see low volume trade in the market make sure that you follow every single tip in order to remain profitable in the market. If you take excessive risk in order to gain more profit then be sure that you will lose a big portion of your trading capital. It’s true that sometimes you will get away by taking excessive risk in the market but in the long run, things don’t work like this. As a professional full-time options trader, you need to know your risk tolerance level and never trade with the money that you can’t afford to lose.