CFD Top 3 Tips When Trading In Volatile Markets

Thanks to the many complications of 2020, the financial markets have moved quite in a bizarre manner so to speak. This year has by far seen the most volatile of markets that the world has experienced in decades. Volatility is something that traders would need to analyze and predict but due to the Covid-19 pandemic, there was quite the unpredictability in the market that a lot of Business tools traders had experienced.

Highlights of Volatility

Review what had happened on February 19th, the Nasdaq and S&P 500 jumped to record breaking heights. With the Dow climbing at more than 100 points in just a few weeks, a lot has feared for the pandemic destroying the economy’s growth. Last March 12, there was a plunge in the S&P 500 at 9.5% which was the lowest one day fall that had happened since 1987.The Nasdaq and Dow Jones were also not spared by the dips.

As you can understand, these events are examples of volatility. A lot.

Time to Trade

Despite the caution, some traders would see these instances as opportunities thanks to the volatility. Most would consider that as the market prices would move, there are much more opportunities to make profits in CFD thanks to the downward and upward movements. As you are prepared to trade in these circumstances, here are 3 of the best ways you can get yourself ready in these situations caused by the COVID 19 pandemic.

Get set up to trade fast and safe

As the conditions in the CFD market affect the bid-ask spreads, a lot fo the traders out there may have a hard time to match buyers and sellers as quickly as they can to execute their orders. So in this instance, make sure that you are able to trade with a broker that can execute fast and has less slippage. As you see the high volatility in the market, you would want your trading to go as fast as possible so you can maximize the chances of getting a better price.Of course, do not forget to make sure your risk management tools are up such as your stop loss and negative balance protection as these are your safety net for these volatile markets.

Setting up a Safe-haven asset

Having Safe-haven assets during these volatile trading times is essential and a no-brainer. Given the pandemic and economic instability, precious metals have been projected and HAD been doing well most especially with Gold as the go to asset. Given the times, Gold has always been the first choice of countries, banks and other investment entities whenever there are forms of uncertainty and recessions. Gold has been protecting economies against situations of  inflation thus Gold will be predicted to move upward for the time being.

Improving your adaptation

We have never seen days where the market becomes heavily influenced and sensitive towards the stories and news cycles that have been coming out. With this contributing to the volatility of the market, you have to ensure yourself that you are able to adapt in these circumstances where the market fluctuates at a very unpredictable manner.Look into strategies and ideas that you may use to adapt to the situations of the pandemic. Look into balancing your portfolio, being long gamma or short selling to name a few things you may incorporate in these situations.

Do your research, and be sensitive to where the currency traders could decide to focus and buy as it is influenced by countries and how they have handled the situation of the pandemic in their doorsteps. It is essential to be well informed with the instances that will affect and dictate the market’s volatility


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