Some say that volatility is a forex trader’s best friend, but how can you make profits on a low volatility trading day or when there are no major catalysts?
Here are some suggestions on how to make profits even when the markets seem to be flat:
1. Look at currency correlations for potential trading opportunities.
The absence of central bank announcements or high-profile economic reports does not necessarily mean a low-volatility trading week for major currencies. One of the advantages of currency trading is that it does not rely solely on central banks and economic data to take action.
All transactions involving money can affect the supply and demand for a currency. Movements in government bonds, stocks, and even major mergers and acquisitions can also affect the prices of major currencies.
Of course, you can’t buy dollars just because the weather in your cousin’s neighborhood is terrible. You also have to make sure that other traders are seeing the same correlations that you are!
2. Try to do money transfer deals.
As stated in the school of pepsology, pregnancy trade Simply take advantage of interest rate differentials.
If rates remain generally the same, you can make money by buying currencies with higher interest rates against currencies with lower interest rates. Cross and exotic currency pairs typically offer the greatest interest trading opportunities.
Just make sure to pay attention to your broker’s spreads, as they can be brutal when there isn’t enough volatility for everyone.
3. Find strategies for a low-volatility environment.
Although trend trading and similar volatility-based strategies are a favorite among forex traders, you can also take advantage of low-volatility methods to make some pips.
You may want to try strategies that focus on ranges, larger position sizes, tighter stops, oscillators, or even trading lower time frames. Feel free to get creative with your strategies to earn pips!
4. Find new players who change the game.
Just because there is no catalyst today doesn’t mean there won’t be any market-moving reports tomorrow. Look at the economic reports collectively and see if there are any changes that might alter the central bank’s policy bias. Listen to central bankers’ speeches for any hints about policy changes in the near future.
Check your news feeds and follow the news circulating in the Forex market for any issues or details that may appear to be the next major currency market mover.
Last but not least, you can also pay attention to the general risk sentiment for potential trading opportunities. Just make sure you have enough flexibility to withstand any additional volatility!
Traders who make consistent profits don’t rely on one trick. They learn to adapt to different trading environments and somehow make profits even when trading volatility is limited.
This doesn’t mean that you should force trades even when there are no big moves to take advantage of. It just means that if you want to make consistent profits, you need to start developing and practicing strategies that can keep you in the game on low-volatility trading days.
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