Apiary Fund Blog

Low Volatility Trading

[fa icon="calendar"] Jun 18, 2019 6:06:00 AM / by Lukas MacMacKen

Low volatility trading can be one of the biggest turn downs to a traders day. Not much is worse, other than a huge loss, than sitting down to trade, signing into the platform, and having nothing to trade off of. No market movements, no trends, and just general low volatility. Thankfully, Apiary Fund reviews many different market conditions to trade in and set up trades, so if you are into shorter term trading, one of the primary trading types that gets thrown askew by low volatility, there’s a few ways to still make some profits for the day.

Lower volatility markets can present themselves in a few different ways. First are consolidations. Consolidations prove hard to trade live, but there's always the breakout trade to help make some of your days profits and you don’t even need to be actively trading to do it. Consolidations can be some of the easiest low volatility markets to trade because you can set your buy stop and sell stop and walk away. Once volatility is reintroduced into the market, the stop orders can trigger whether or not you are there and trigger the take profits.

The downfall, however, to these breakout trades is finding the right take profit and stop loss. Since there's a lack of volatility, there isn’t usually a point of contact to figure a take profit and stop loss. Since there isn’t that level nearby to base things off of, you have to estimate the target levels. This can lead to underestimation and not making as much as you could have, which is usually the best case if you don’t have a good idea of where the market will go. On the other hand, you can overestimate on your profit level and end up hitting your loss. Both of these scenarios are seen in a lot of the accounts that Apiary Fund reviews. Being able to find the best option, be it multiple entries with different profit goals or a safe underestimation, is important in your trading.

Another way to approach low volatility markets is by adapting a scalping like strategy or a long-term strategy depending on the severity of the lack of volatility or surrounding price movement. If the low volatility is forming a rectangle ranging 5-10 pips, then scalping can be incorporated to catch the movements between support and resistance. If the market is on a seeming hiatus and you cannot capture the brief in between movements from support to resistance, then a longer term trend or overarching chart pattern should try to be found for a longer trade. If you cannot find one on your current chart, moving up a timeframe or two will usually allow for a pattern to become more apparent.

There are many more strategies you can implement to capture pips in low volatility times, but these are the biggest two, and typically the lowest risk two as well. There will be times in the market though where there is nothing happening and you will feel more comfortable not trading. That's totally fine. Trading is about being comfortable and confident in what you are doing. Lack of confidence and comfort in trading results in hesitation and mistakes that could make a no trade day a losing day.

Topics: trading forex, trading tips, apiary fund review, low volatility

Lukas MacMacKen

Written by Lukas MacMacKen

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