The Greek Crisis Returns Causing A Volatile Market

As the market closed on Friday, January 2, 2015, the EUR/USD had been trading as high as 1.2069 when it plunged to 1.1998 at closing. This pair is trading at the lowest levels since 2010, all because of news regarding the return of the Greek Crisis. When the market opened Sunday evening, the opening was even lower at 1.1934, and staying well below the famed 1.2000 level. Whatever happens because of the things occurring in Europe, it is definitely causing volatility in the markets.

Because of all this volatility, some have said that the Euro found itself “bidless” meaning that if you were long on a contract, there was no one willing to buy back your sell in order for you to close your trade. If that is the situation you find yourself in, you may not have made it past the morning margin calls.

The following image shows the drop in price from closing on Friday to opening on Sunday.
To view larger image click HERE..

Suppose you had been paying attention to world news and bought a spread shortly after the market opened Sunday evening. You chose the EUR/USD 1.1825-1.2075 and bought it for 1.1944. Your risk is capped. The most you can lose, without putting in any stop loss, is $119; the difference between your bought price of 1.1944 and the floor of your spread which is 1.1825. Each tick is worth $1. The only margin you have is the amount you put up to enter the trade, which would be $119, not including fees.

The market goes down and up. You have your own trading strategy. Maybe you got out at the top of the trend when the market hit 1.1976 and you made $32. It’s possible that you held it to expiration and it closed at 1.1943. You would have lost $1, but your risk was capped and no one is going to be calling you to ask for more money to be put into your margin account.

This is how to trade a volatile market with less worry. You can trade Nadex spreads which have no margin call. They always have capped risk. You know your risk when you enter the trade.

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