If you employ short term trading strategies like scalping or use 15 min charts or less, then you want to refer regularly to the Forex Volatility chart. This is where you get a big picture of what’s moving now and what’s not and to be in the position to capitalize on the volatile nature of the specific Forex pair. Remember to also refer to the ADX indicator to confirm the volatility. Short term traders typically like to enter into position when there is increasing volatility. Longer terms traders can also use this Forex Volatility Chart as reference… to enter into position when pairs are having decreasing volatility.
Trading Volatile Market Requires Practice
Trading on volatile environment requires plenty of practice but it can be one highly profitable trading approach as it can increase your cash flow substantially… and in a short space of time. The biggest challenge in short term strategies for most traders is the inability to control fear and greed. When there is no clear signal, a trade is taken anyway or when you find yourself trading too often or having the urge to trade, you know this is the time to really step back and regroup your emotions.
However, be warned, the shorter the trading time frame, the higher the risk (well, that’s in our opinion).
The way you want to use the Forex Volatility chart (below) is to seek out the volatile Forex pairs and apply your strategy. This table provides good guidance and overview of what’s volatile or what’s becoming volatile so that it saves you time before even having to refer to the ADX indicator. If you would like to trade on volatility but still have not settled on a strategy, then perhaps you can take a look at out Scalping strategy. It’s very short term and it’s really fast trading. Be sure that you spend enough time and practice on your demo account before committing any real money. We call this Forex scalping strategy, 60 Sec Scalping.