Forex chop requires new strategies

摘要

Currency price movements have been very challenging in the past few months with wider than usual ranges. A sure sign of increased uncertainty are large wicks or tails in the candlesticks. (See "Yen's bumpy ride"). In these conditions, even the best traders can get caught by surprise with the price action moving against them. The result can be disastrous. If the trader left on a very wide stop loss, the resulting drawdown on a position often can wipe away days of trading if stopped out or cause the account to drawdown, making it difficult to put on any new trades. When caught in this scenario, the trader is hoping for a reversion to the anticipated direction that prompted the trade. Strong trading strategies, whether technical or fundamental, should not depend on hope, though.