Volatile markets

[Iron]

Let's say you've got a market which is neither ranging nor trending, but is basically jumping around fairly randomly.

If I were to put an order in and get matched, the market might jump 5 ticks away from me before I can close my trade.

Are such markets best avoided because of this risk?

Thanks

Jeff

[to75ne]

if you cant make sense of a market cause its to volatile, then stay out. see if it settles down. if you think you might be able to trade it, use small stakes. depending how jumpy it appears to be, place a good few ticks away from the current price, and let the price come to you, and be ready to scratch for a loss if you misjudge it.

[Iron]

Thanks Tony

My hunch is that offering a price right next to the spread in that kind of market would be a bit dangerous, as by the time I'm matched, the market will probably be moving against me.

But I thought that, if I could offer some money a few ticks from the action, to get near to the front of the queue, then I might be able to catch some nice counter-moves when the market retraces.

What do you think?

That said, I'm thinking of simply giving higgledepiggaldy markets a miss, as they possibly account for most of my losses. Give me a strongly trending or flat market over one that jumps around like a flea on acid any day!

Jeff

if you cant make sense of a market cause its to volatile, then stay out. see if it settles down. if you think you might be able to trade it, use small stakes. depending how jumpy it appears to be, place a good few ticks away from the current price, and let the price come to you, and be ready to scratch for a loss if you misjudge it.

[to75ne]

Personally i agree offering (or taking a price for that matter) at or near to the current price if it’s really jumpy is too dangerous.

When I say use small stake I mean at least a quarter of your normal stakes, even one sixth. Its just not worth the risk if it goes wrong. As you no doubt know in such markets you have little if any time to think.

Quite a few of them will settle down after a period of hectic jumping around but I agree with you Jeff it’s not really worth the risk if they don’t, certainly not with your normal stake level. Always remember there is always another race, maybe not today, but more often than not tomorrow. Protect your bank.

[Iron]

Thanks for the advice Tony. I agree - overtrading is a killer.

In my experience, one of the hardest parts of trading is to keep my hand away from the mouse when I think there might be money to be made!

Jeff

Always remember there is always another race, maybe not today, but more often than not tomorrow. Protect your bank.

[gutuami]

rather than avoid it trade with very small stakes. You might learn smth new.

[CaerMyrddin]

I have to confess I like this kind of market, as the rewards can be very high, although the risk is high too.