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After a few years of low volatility, the currency market is back on its track in 2020, mainly due to the latest global health crisis. With the risks of a new economic downturn elevated, pressure on the financial markets had increased, which means forex traders must adjust their trading strategy in order to withstand any challenge that could arise along the way. In case you don’t know how to proceed, here are four key tips that will help you navigate uncertain markets.

Alt-text: enhancing forex trading in 2020

#1 Using risk management features

Brokerage companies are competing in order to provide their clients with enhanced trading features, so traders will benefit from protection in the face of decades-high volatility. Improved negative balance protection, canceling limit trades inside price gaps, or reducing leverage are just a few of the measures. Another interesting feature is dealCancellation developed by easyMarkets, a unique and innovative tool that allows traders to undo their losing trades within 1,3, or 6 hours since the opening.

Difficult times require us, traders, to adapt to different circumstances. If your trading goals are long-term, getting-rich-quick should not be your approach in 2020. Make sure you are fully aware of all the features your broker has implemented and see what could be useful in providing protection.

#2 Trading Liquid and currency pairs with low liquidity

Having a well-diversified portfolio of currency pairs will be critical, but most of the beginner traders fail to achieve that diversity. They trade different pairs, but in reality, the risk is well-concentrated into a single currency (the US dollar most of the time). Also, traders generally focus either on very popular pairs (EURUSD, GBPUSD, or USDJPY) or exotic pairs (GBPJPY, NZDJPY, etc.).

A more balanced approach will provide exposure to both high-liquidity and low-liquidity pairs, ensuring that an unexpected market move won’t generate a huge loss. Complacency should be avoided in the months ahead, considering that things could get worse before they get better.

#3 Adjusting risk management parameters

The market is already fluctuating unpredictably, which means there’s a need for risk management adjustments. Professional traders reduce their trade size, increase the Stop Loss and Take Profit. That happens because it’s increasingly difficult to predict 100% accurately where the market is going to turn or where a corrective move will end. Due to the high volatility, each market move will be exaggerated before it moves as you’ve anticipated. Remember the market can remain volatile longer than you can remain solvent.

#5 Reducing trade frequency

The choppy market activity should not be viewed as strange but should be treated with caution. There will be many times when you can’t anticipate how the market will move forward. Remain patient and stay on the sidelines until things will be clear. Reducing trade frequency and being very selective with picking trade opportunities will ensure that the accuracy level will remain elevated, even during a challenging period. Handling your performance without any emotional hijacking is not possible if you are overtrading on a constant basis.

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