Daily trading ranges shrink down, the charts flatten out, and indecision causes brutal price churning. Low volatility means very poor price movement.

No price movement equates into minimal trading opportunities for us Forex traders. Nearly all trading strategies will depend on good market volatility to function at a profitable level.

Non-directional markets are very painful for Forex traders, especially for us swing traders. Exposing any trading system to markets suffering from low volatility is the equivalent of watering a dead plant.

Slow market conditions are markets which will make regret every getting involved.

They are a giant black hold for profit — the high churning nature will eat alive any good trading system. The markets are quiet, nothing is happening and you have that itching feeling that you need to be more involved with the market, a common Forex trading mistake. The temptation is overwhelming because the recent low volatility has restricted you from pulling the trigger on any trades.

Sitting in front of the charts waiting for something to happen will put you in a dangerous situation where you might be tempted to force a trade purely out of boredom, or desperation. Some people like to get out, play a sport and keep fit. Other traders I know love their video games.

Find something that you enjoy and go do it. During periods of low volatility price movements hardly have the momentum to push through to those 3x targets. As a temporary measure you can back off your risk reward targets to 1: Any lower than that will start to put pressure on your capital growth.

If the markets are slow I still think the best option is to stay out.

5 Tips For Trading In A Low Volatility Environment

I am always trying to get large return on investment with my Forex trades, I am not interested in taking risks if the reward is only going to be 1: Back in my earlier days as a trader, I used to make the mistake of opening too many positions at once. I would trade multiple signals across the market at the same time — frequently trading up to 3 setups at once.

The problem was most of these signals were generated from correlated price action. If one of the setups failed, there was a good chance the rest would fail as well. Opening multiple trades at once seems like the smart thing to do at the time, but it never ends well. Emotions will flare up and put you in a dangerous mindset where you may think and act irrationally.

The best way to avoid this kind of unnecessary over trading is to stick to the one position at a time rule. Risk management also becomes so much easier, emotionally and psychologically. As mentioned above, finding something that will distract you from the trading screen to get your mind off the charts will go a long way in maintaining a healthy attitude.

It might be helpful to read over some of our trading psychology articles to help usher you away from silly trading mistakes. During thin, low volatility markets, indicators become very sensitive to price movement.

Why is FX Volatility So Low, and How do we Trade Inevitable Return?

The longer the consolidation, the more sensitive the indicators will become. Focus on what the price action is doing , not the indicators. There is no magic rule which will determine the exact time the market will dry up and see volatility disappear. Generally the market will pause in anticipation of the next move from central banks. The time difference between acknowledgement and action is when we see market activity die off and periods of low volatility born.

The market will swing from tough times when nailing a good trade seems impossible, to times where you could almost buy or sell at any point and make some returns. Something to look forward to are those strong breakouts. After lengthy periods of indecision the market will eventually explode with movement. Check out the gold chart below. As you can see the breakout was severe.

9 Strategies for Trading a Low Volatility Market

The only thing you should be thinking of tweaking is your money management, adjusting it to suit market conditions. But it most cases it is best to leave your system alone and wait for better trading conditions to come along.

Check out our War Room membership package. This is the perfect blog for anyone who wants to know about this topic.

Thanks for sharing your tips. Dale Woods has been an obsessed Forex trader since , trading from his home computer. Dale focused his energy into chart reading and technical analysis. War Room Login Support Desk About Us. Menu Home Forex Setups Latest Commentary Price Action Signals Articles Forex Trading Strategies Forex Trading Psychology Money Management MT4 Tutorials Indicator Autopsy Forex Beginners Course Video Tutorials The War Room Tools MT4 Battle Station Candlestick Price Action Indicator Custom Chart Generator Home Forex Setups Latest Commentary Price Action Signals Articles Forex Trading Strategies Forex Trading Psychology Money Management MT4 Tutorials Indicator Autopsy Forex Beginners Course Video Tutorials The War Room Tools MT4 Battle Station Candlestick Price Action Indicator Custom Chart Generator.

How to Stop Slow Markets from Screwing Your Trading Performance Dale Woods May 31, Forex Trading Articles , Forex Trading Psychology , Forex Trading Strategies 3 Comments. Trading systems will perform poorly without the volatility to cause price movements.

Why is Volatility Important Anyway? Without sufficient volatility, the charts will lack direction and vital movement.

How to trade during periods of low volatility in Forex Markets

Try not to let it get you all worked up. Find something that will distract you and keep your mind off the markets. Summary Slow markets are not something you can control, but you can control your actions in front of the trading screen.

If the market is slow, there is no point trying to force trades — turn the screen off and go do something you enjoy to keep you mind off the markets. Have a break and wait for the volatility to enter the market again.

It is not recommended to go below 1: You are not a bad trader if you stay out of the market while you wait for conditions to improve. Summary If indicators were not bad enough, they become 5 times worse during slow periods.

If you rely on your indicators to give you trade signals, you will be put through the money grinder when the market flattens out as the indicators will becomes extra sensitive to price movements and generate a huge amount of bad signals. Summary Low volatility, slow, flat market conditions usually spawn when the market is anticipating a decision from a central bank, regarding their policies.

When a decisive breakout occurs, it is usually very violent, and hard to position into. The safest play is to wait for a trade signal to develop once trending conditions are present. Did you enjoy this article?

It would mean a lot to me if you could share it! Leonel Ruiz June 17, The tips were pretty great. I hope I could use these tips in my future tradings.

Please Leave Your Comment Below About The Author Dale Woods Dale Woods has been an obsessed Forex trader since , trading from his home computer.

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