Upheavals are prone to occur in every market. Besides the average market risks that you should be aware of, there are those highly volatile conditions which might appear daunting to several traders. But the truth is that if you handle the volatile markets you can end up making some impressive gains.
If you set it and forget it, then there is nothing to worry about
The ‘set and forget’ trading regime is something that several part-time traders follow. This helps them as it doesn’t require too much of your time. You also do not have to be emotionally moved by the sudden changes that occur. You simply have set position and would not be bothered by the volatility.
Keep it low when the markets move too quick
Even a sound trading strategy cannot accurately predict the market movements. So when the price changes are too fast it is a good idea to keep the costs low. Check for the low price stocks and those that are possibly undervalued. These might be the safest bets when the market is erratic.
Limit orders would give you an edge
When you have traded for quite some time you would be able to make nearly accurate predictions about the price direction. Once you have this signal set a price above the market price and then place a limit order. This is one of the simplest ways in which you can buy the market trend. Buying against the trend could be beneficial in a few situations. But for the volatile markets buy the trend to reduce the risks and to increase the gains. Limit orders are known to reduce the chances of losing as you end up placing a bet which in turn helps push the market upward. During a high volatility period instead of the stop-loss orders which are otherwise safe, limit orders are advantageous.
The ‘long and short’ of it
Long-term portfolios are great but then when the market gets volatile it is a good idea to adjust the exposure and balance the long and short approaches. Short trades and long trades, when mixed in the right proportion, would help you make money during volatility. Master your shorting skills as soon as you step into the field of trading. So you would be prepared to balance your portfolio if you would like to tap the plenty of opportunities that a volatile market offers.
Identify a range and trade within it
Even in the highest volatility, there might be a range. If you watch the charts closely then you would be able to find the limits within which the price swings giving you a range to trade in.
When you have the right strategies you can make a lot of money in a volatile market where the gains can be very much higher than the gains made otherwise. This would help you become an active trader who doesn’t rest even during an active market. If nothing else works use the opportunity to try investing in other asset classes.