The volatility trading strategy is a trading strategy that relies on identifying market volatility and trading financial assets based on that volatility. This strategy is based on the idea that markets do not move in a straight line, but rather fluctuate between support and resistance levels.
Principles of Volatility Trading Strategy:
1. Identifying Volatility: Identifying market volatility by analyzing charts and historical data.
2. Identifying Support and Resistance Levels: Identifying support and resistance levels that influence the market.
3. Trading Based on Volatility: Trading financial assets based on market volatility.
Types of Volatility:
1. Upward Volatility: The volatility that occurs when the market moves upward.
2. Downward Volatility: The volatility that occurs when the market moves downward.
3. Lateral Volatility: The volatility that occurs when the market moves sideways.
Features of Volatility Trading Strategy:
1. Risk Reduction: Reducing risks by trading financial assets based on market volatility.
2. Increasing Profits: Increasing profits by trading financial assets based on market volatility.
3. Performance Improvement: Improving performance by identifying market volatility and trading financial assets based on it.
Disadvantages of Volatility Trading Strategy:
1. Error in Identifying Volatility: Errors in identifying market volatility can lead to losses.
2. Market Fluctuations: Market fluctuations can lead to changes in market volatility.
3. Psychological Pressure: Psychological pressure can lead to trading errors.$TIA