Why is low volatility in the forex markets bad for traders?

May 7, 2014 at 11:46 am

Answer by Dave Hughe:

Traders make money on price moves. They either buy low and sell high or sell high and buy low in the case of short selling. If there is no price move there is no money to be made. As simple as that.

The direction of the move is not important but it's imperative that there is a meaningful price move. Since no one can predict on a regular basis when the price is going to change, traders can capture only some part of the move. Therefore the move has to be wide enough for a trader to recognize the move, open a position and make a reasonable profit on that position before the direction of the move changes.

Trading non-volatile choppy markets is very difficult and requires a lot of patience and strict money management.

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