No matter how much you’ve analysed the market, how much tools and indicators you used to predict the next move, anything can happen during a trading session so it’s crucial to know how to deal with unexpected events. In this article, we’ll show you how.
Even if you would use supercomputers performing high-frequency trading for you, you cannot be certain of what the market is going to do next and therefore always make the right call. There are so many factors that influence the price of a financial instrument whether it is on the technical side or on the fundamental side. Technology also plays a role as it is evolving at an exponential rate, far more quickly that we can assimilate it and reaches all branches and all industries thus influencing prices in many different markets. In times of unexpected events, volatility can become wild and price can fluctuate from one side to another very quickly, especially in markets like the Forex or Cryptocurrencies.
If price action takes a direction that you didn’t foresee, the most important thing is to stay calm and in control of your emotions. Dealing with significant gains or losses trigger strong responses in ourselves and it is necessary to not let these feelings take over and influence your decisions as you will probably make unnecessary mistakes. If this unexpected move goes against you, make sure that you have a stop loss in place in order to cut your losses. If the market is really volatile, don’t set it too tight though as it might hit it first but can go back on the other side quickly. If you’ve experienced a big loss, so be it. Take some time off trading, relax and come back to it when you’re ready. Now, if the market takes a really positive turn that you didn’t anticipate, don’t become greedy and make sure to take your profits while you can. Again, the market can go against you at any given moment in times of high volatility and you will not forgive yourself that easily if you didn’t close that trade while in the green when the market goes red.
Stick To Your Plan
Regardless of what the market is doing, you should stick to the trading plan you’ve made. Having a strategy in place will help you to reamain grounded no matter which situations you’re facing in the market. Develop the discipline to know in advance when you want to get in and out of the market and how much of your trading budget you will dedicate to each trade. That way, even if unexpected events happen and things go wrong, you will be allright as you know in advance the potential losses that can occur. We can’t stress this enough, having a plan and keep up with it each time you trade will help you greatly to remain in control of yourself which is crucial especially when dealing with unforeseen circumstances.