The climate of geopolitical uncertainty of this historical period also had an impact on the financial markets causing a increased volatility and causing large and often unpredictable movements. Of course, the high volatility can be exploited but to do so you need skills and nothing should be left to chance.
As Andrea Unger reiterates, the only trader to have won the World Trading Championship 4 times in the Futures category and founder of the Unger Academy, “Moving on the markets right now requires particular caution and that is why we have developed a handbook of useful tips for face the markets in conditions of high volatility “:
1) Better to get rich slowly than poor fast. Approaching the markets is not a sprint but a long and demanding marathon. You need training and skills, and above all you must never improvise.
2) Make sure you use only reliable information. Before relying on any information, especially if found online, check that it comes from reliable sources. This applies to both training and the data services or signals you use to trade.
3) Keep emotions at bay and don’t engage in obsessive behaviors. Trading involves winnings and losses, and therefore can give rise to strong emotions or compulsive behaviors. In addition to technical skills, he tries to develop emotional ones as well, in order to better manage the typical emotions of trading.
4) Be pessimistic: always start with losses. Instead of deciding how much to invest in a certain trade based on possible profits, focus on the size of the losses you could face in the worst possible scenario.
5) Give due importance to losses. Professional traders are aware that losses are part of the trading activity and therefore try to limit them by adopting a conscious risk profile.
6) Build a well-diversified portfolio of strategies. Diversification is the key to managing risk correctly. A good portfolio must contain strategies based on different approaches and operating on uncorrelated financial markets and sectors.
7) Consider adopting a systematic trading method. Unlike the discretionary approach, where the trader makes decisions based on personal considerations made by analyzing charts, the systematic trader makes trading decisions based on tests, numbers and statistics. Furthermore, a systematic trader can operate on many markets simultaneously, improving their diversification.
8) Test your strategies before investing any money in them. Backtest a strategy, i.e. test it on the historical data of a market. In this way you will have a concrete idea of the possible performances of the strategy in the short, medium and long term.
9) Use the right data to test. When testing a strategy, use data that covers different market phases: bullish, bearish, sideways, highly volatile, etc. Also remember to exclude periods with conditions that will not occur again.
10) Don’t create too complex strategies. The more elements (indicators, filters and conditions) a strategy contains, the more likely it is that the conditions required to function will fail.
“There are no tools or shortcuts that can make us rich overnight. Trading requires preparation, technical skills, psychological and emotional resistance, patience and method. Unger points out that the current increase in volatility should not be a valid motivation to improvise trader, but encourage those who wish to venture into this world to undertake a training course to acquire the skills necessary to operate in the markets regardless of their level of volatility.