Trading CFDs When Markets Are Dominated by Fear

Navigating the markets in the current uncertain environment is a great challenge even for the most experienced traders. The coronavirus outbreak seems to have sparked doubts about the 2020 global economic performance and as a result, financial markets around the world had started to price in poorer expectations.

Since volatility is so high, short-term trading is one of the most suited approach and CFDs some of the useful trading instruments to trade right now. That’s why we want to give you a few useful tips on how to manage trading in order to end up with better results.

Filter the news and think independently

The media will try to profit from these fear-dominated periods and as a result, will spread a lot of misinformation. Your job, as a trader, will be to filter fake news and focus on the news that can really have a meaningful impact on your trading decisions. Leave the small talk aside and figure out what will impact the prices at any given time.

Don’t allow any news to influence your decisions and at all time, think independently in order to be able to spot market details that only a few professionals manage to find. This isn’t about how good you choose a broker, but how you can profit from the volatility and use it to your advantage.

Adjust your risk management

Since you’ll be dealing with uncommon market conditions, it will be imperative to keep risk under control. Especially if you are not fully confident about how the market will react, reduce your risk per trade and trade size. That will help you limit your losses, in case the market takes an unexpected turn and at the same time, it will allow you to place wider stop losses.

Wild swings can take you out of the market before the price goes in your direction and in order to limit that it’s important to adjust how you place your SL.

Watch for important technical levels

Considering the markets will behave in a wild way, another important thing to do is placing trades around key support/resistance levels. By doing so you’ll make sure you’re active when most of the big companies are as well. It will be tricky as well, but if you keep your risk under control, in combination with careful trade placement, things will become easier, even when the market does not perform as you expect.

Binary Options Zone Copyright © 2019