The ongoing trade tensions between the United States and China on the one hand and
the US and countries such as Canada, Mexico and others on the other hand, have led
to increased market volatility, presenting both challenges and opportunities for
investors. In this article, more attention will be on the trade face-off between the US and
China. While long-term investors may find such fluctuations unsettling, short-term
currency traders are capitalising on the rapid market movements to make good profits
from their trading.
Volatility—the rate at which the price of a security increases or decreases—is a key
factor for traders. Increased volatility can lead to significant price swings in currency
pairs, creating opportunities for profits. However, this development also carries high risk,
necessitating effective risk management strategies.
One common approach in volatile markets is the use of stop-loss orders to manage
potential losses. By setting predetermined exit points, traders can limit their exposure to
adverse price movements. Additionally, adopting shorter trading timeframes allows
traders to respond swiftly to market changes, potentially improving their chances of
making profits.
The trade war between the US and China has also led to fluctuations in commodity
prices, which in turn affect commodity-linked currencies such as the Australian dollar
and the Canadian dollar. Traders monitoring these developments can take advantage of
the short-term opportunities arising from these price movements.
It is important to note that while increased volatility can offer profit opportunities, it also
demands a disciplined approach to risk management. Traders should ensure they have
a well-defined strategy and are prepared for the potential risks associated with rapid
market movements.
The U.S.-China trade wars have heightened market volatility, creating a situation where
short-term currency traders can find more opportunities. Traders can navigate this
trading environment to their advantage by employing effective risk management
strategies and staying informed about market developments.