Trading during periods of price volatility requires smart strategies to avoid risks and achieve profits. Here are some strategies that can be effective:
1. Trading based on news: Markets are affected by major news and events, such as central bank statements or major company announcements. These events can be taken advantage of by analyzing the news and real-time analysis to follow the expected price movements.
2. Scalping: This type relies on opening and closing trades in very short periods of time to exploit minor market movements. This method requires careful monitoring of the market and quick decision-making.
3. Oscillation trading: It is based on taking advantage of large fluctuations by analyzing areas that fluctuate between resistance and support levels. When a support or resistance level is broken, this can be a strong signal to buy or sell.
4. Use technical analysis: Technical analysis such as Japanese candlesticks, relative strength indicators (RSI), moving averages, and others, can help you understand market behavior and make informed decisions when there are fluctuations.
5. Hedging: This is done by opening opposite trades to limit losses in case the market moves against you. For example, if you expect the price to fall, you can open a sell trade to protect your capital.
6. Capital Management: One of the most important points while trading during periods of volatility is to have a strong capital management plan, such as determining the size of trades, stop loss points, and take profit points, in order to protect your investments from large losses.
7. Multi-timeframe analysis strategy: Looking at the market from multiple timeframes (such as looking at the general trend on a daily timeframe, and identifying entry and exit points on a lower timeframe, such as 15 minutes) can give you a comprehensive and integrated view of price action.
8. Buy or sell strategy in stages: When there are volatility, it is possible to buy or sell your assets gradually instead of entering into a single trade. This helps to reduce risk and better adjust entry points as prices fluctuate.
Price fluctuations represent great opportunities and risks, so you must analyze well and make sure that each strategy suits you and your risk tolerance level.
