Useful information regarding forex market volatility
Forex market is the largest market in the world. Every day, there are trillions of dollars transacted by the buyers and sellers. In this market, market volatility is an important factor. Many traders argue that forex market volatility is bad for trading. It keeps the price level of the currency pair always changing and makes the most of the trader in the market lost their money. The other group of traders does not agree. They think market volatility is what makes the trading and transaction in Forex random and balanced and also possible. If there were no volatility, every trader would have made a profit and there would be no money in the market.
We are going to discuss whether the market volatility is good or bad for Forex. The answer will not be same for all the traders, as different types of traders like different volatile markets. For instance, if you look at the expert Aussie traders then you will notice that most of them prefer high volatile market. However, some of the traders often prefer low volatile market conditions and they make a decent profit by trading the ranging market.
Market volatility is what gives you profit
First of all, we have to say that market volatility is good for the traders. It is what gives the traders their profit. In a market where there is no volatility, the price level of the currency pair would not move. If you have purchased 10 Euros for 20 Dollars, without market volatility, how can you make money by selling the Euro at a higher price? This is why this volatility is important to give their traders their money. The European market gives the best movement in forex and many traders like to trade in the European market.
It also takes your money and profit
Market volatility is also the reason you lose in forex. There is hardly any trader who cannot say they have not lost a cent in forex. Every trader in Forex has lost their money in the volatile market. But you are not the winner every time. When you are making a profit, you are making money at the expense of another trader’s money. Though this volatility gives you money, it is also the reason money goes from your account when you place trades on the market.to be precise due to the market volatility in the forex trading industry all the profit and losses are made.
How to use the volatility
Most of the time the professional traders wait for the extremely volatile conditions of the market. If you can truly master the art of trading then you can easily make a decent profit by trading the high volatile market conditions. However, most of the novice traders execute high lot size trade during high volatility and even lose their trading capital. It’s true that sometimes they will get lucky and hit the jackpot but considering the long term scenario, it is one of the most dangerous mistakes in the financial world. As a professional trader, you should always trade the higher time frame with proper money management factors. Some traders often use the price action trading strategy since it allows the traders to spot the perfect trades in the market. So if you are relatively new in trading then make sure that you learn the art of price action trading strategy to limit your risk exposure in the financial market.
Summary: It is not important whether market volatility is good or bad for traders. What is important is to understand volatility as there is no money in a market without volatility. You have to practice in forex to use the volatility in your favor to place trades and make a profit in Forex.