Another slow week for markets, how to trade on quiet markets?
Here are some tips.
Low volatility is perceived as a markets condition that happens when prices are not moving fast, and risks are very low. It is the contrary of a volatile market where prices are changing rapidly in one direction or another.
Due to lack of activity, quiet markets are less attractive for traders, especially for day traders . As a market participant, you will inevitably face a quiet period.
– Nowadays traders measure the market volatility using the VIX (volatility index). VIX tracks the prices and the market volume on the main traded Index S&P500. The faster the prices are moving the higher the VIX value.
How do you understand the VIX ?
• VIX price below 12 => low volatility
• Between price between 12 and 20 => normal volatility
• VIX price above 20 => high volatility
Other more important skills to develop and take advantage of slow markets are:
– Patience
Being profitable can mean collecting profits from small gains with slow price movements. You will learn that it is better to watch the markets wait for one good trade than closing your trading platform due to markets inactivity.
– Adaptability
Buy Low, sell High makes senses when a trader combines both sentiments and technical analysis , then volatility doesn’t matter anymore since there will be always a support + resistance level to target supported by constant news release affecting the currency or the stock traded.
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