How Market Volatility Can Benefit Traders
By: Darrell Martin, CEO and Founder of Apex Trader Funding
According to the Commodity Futures Trading Commission, futures and options volume in the U.S. alone has double since 2007. In the past ten years, volatility and volumes have risen fueled by the number off first-time traders seen especially in the start of the COVID pandemic.
New and experienced retail investors have spent the last year navigating an unpredictable market. Talks of possible recession, rising inflation and Fed interest hikes (just to name a few examples) have been challenging to many. Alternatively, this market volatility brings increased opportunity for traders to turn a profit in a shorter amount of time.
Here are a few examples that traders need to consider as we continue to move forward into 2024 when looking to take advantage of the market:
- Establish your trading goals.
- Before entering a volatile market, it’s important to be prepared to managing any risks involved. Be sure to trade with confidence and not to let your emotions get the best of you. Understand that any trading may lead to a significant loss of capital.
- Some traders place smaller trades and use a wider stop-loss than they would when markets are quiet. Remember, you should note that stop orders can be executed far away from the stop price if there is a big price gap or rapidly changing market conditions
- Look for trends in the market
- Be sure to take a look at tending stocks that can lead to you buying in a breakout. Also, futures offer greater daily ranges for traders and enhanced price action.
- Consider short-term strategies
- Whenever you’re entering volatile markets, traders might want to consider setting a specific profit targets, start a trailing stop sooner than normal, or sell part of a position at the first good profit-taking opportunity
Remember to always be prepared when entering the market and consider any risks. When market volatility begins to reach a certain level, things can start to move incredibly fast. Whether you are one of the 750,000 traders who entered the market at the start of the pandemic, or a seasoned full-time trader, always take advantage of volatility.
