It has been known that in order to effectively trade in the foreign exchange market, the current trends must be followed. But sometimes the trends in the market become very unstable. And when this happens, the forex traders, especially the new ones, will become very frustrated and confused. Therefore, it is a necessity for every trader to have knowledge of different trading strategies, especially when the market becomes unpredictable.
So here are some helpful tips for efficient exchange rate trading in an unpredictable market. Of course, you can apply these tips while using a demo account. After all, using a demo account allows you to practice forex trading and get you prepared for the right thing.
1. Check your financial calendar. You need to be sure that current market movements are not just based on temporary news reports. Because if the economy is really low, you better stay out of the currency market until everything goes back to normal.
2. Check turning points as well as resistance levels and support. In an unstable market, you will notice that the resistance and support lines are parallel. So you can foresee that the market will turn as it approaches resistance and support lines. You can also use a stochastic oscillator to help you identify signals of a good trade.
3. Use another indicator to confirm your conclusions. If the resistance and the guides touch, there is probably a breakout. And if this is the case, you can't assume the price will turn again. So maybe you just want to set your orders beyond the stretch of resistance and the guides so that you can have an upcoming outbreak. However, you will need a different indicator to confirm your conclusions.
4. Confirm your currency trading strategy. It always happens that two pairs of foreign currencies contradict each other. For example, USD / CHF and EUR / USD are two contradictory pairs. One of them is sure to rise and the other is sure to fall. So you have to plan which currencies you want to trade.