Volatility spells risk for some but opportunity for others. In emerging markets, the currency’s value changes quickly, creating exciting currency roller coasters. Learning how to trade in markets is easy with TradingView.
What Are Emerging Market Currencies?
Emerging market currencies originate from developing economies transitioning into advanced nations. While no standard definition exists, these countries typically sustain high growth while integrating with the global economy. Examples include the Brazilian real, Russian ruble, Indian rupee, Chinese renminbi and yuan, and South African rand (the BRICS). Other notable emerging market currencies are the Singapore dollar, Mexican peso, Polish zloty, Czech koruna, Thai baht, and Hungarian forint. The “emerging economy” status relies on various growth and development benchmarks that can be tracked using the TradingView app.
Unlike major currencies, emerging market money tends to experience high volatility. However, their expanding economies confer exceptional growth and investment potential. These developing nations often implement aggressive pro-industrial policies, seeking rapid advancement.
This contrasts the G10 currencies of leading economies like the United States, Eurozone countries, Britain, Japan, Canada, Australia, New Zealand, Sweden, Norway, and Switzerland. These major countries’ currencies deal heavily in liquid markets, offering relative stability. However, limited price swings also mean fewer profit opportunities from volatility for currency investors.
TradingView Strategies To Profit From Emerging Markets Currencies
Stay Informed
Volatility refers to sizable price fluctuations in an asset over time. Some perceive it as risky. But for seasoned traders, it presents profit-making opportunities. Emerging market currencies tend to see dramatic volatility. Values shift rapidly as various events unfold. As such, traders must act decisively amid volatile conditions while staying informed.
The TradingView platform provides an integrated news feed so traders can monitor developments. Geopolitics or economic announcements often spur sudden market movements. Users can access news based on region, market, publisher, etc.
Traders can configure custom price alerts around technical levels, indicators, or news events. Alert options include on-chart popups, audio signals, email notifications, text messages, and mobile push alerts. This keeps traders aware of meaningful shifts across multiple devices.
Use Stop Loss and Take Profit
When trading, choose risk management strategies aligning with your personality and strategy. Avoid blanket stop loss and take profit settings, as these may prematurely close positions, eventually depleting your capital.
Instead of arbitrary price levels, set stop losses based on logical points where your analysis would be invalidated. Remember to account for volatility, which could knock your positions out before reversing as expected. Do not default to round support/resistance assumptions. Prices often pierce these temporarily before resuming the trend.
If using a popular strategy, follow defined stop loss and take profit protocols. Otherwise, select methods that suit your plan while respecting money management rules.
Follow these steps to apply stop loss and take profit levels when trading currencies on TradingView:
- Step 1: identify trade entry levels by analyzing the price chart. Next, use the Trade Panel (typically right-aligned) to enter buy or sell orders indicating position size.
- Step 2: In the panel, check the stop loss and take profit boxes. Enter desired rates as pips, specific pricing, percentages, or dollar amounts.
- Step 3: For existing positions, click the edit icon within the Positions tab. A window then enables modifying current stop loss and profit targets. Check the boxes, enter new rates, and confirm changes.
Use Charting Tools and Technical Indicators
TradingView’s charting system is one of its strong points. Users may select from various chart styles, including candlesticks, Heikin Ashi, Renko, and Kagi, as well as several periods and themes, to analyze price movements better and find patterns. TradingView also allows for the simultaneous comparison of many assets or time frames via customized multi-chart layouts. Moving Averages (MA), Relative Strength Index (RSI), Bollinger Bands, candlestick pattern recognition, and many other technical indicators are available in TradingView to help traders analyze market conditions and trends. There are also specific volatility indicators traders can use to identify opportunities. Such indicators include the Average True Range (ATR) and the Volatility Index (VIX). They assist you in determining when markets are volatile and when it is ideal to trade.
Risk Management
An essential part of managing risk is following a trading plan. A trading strategy should include your criteria for entering and exiting a trade. For instance, decide beforehand how much of your money you can afford on any transaction and how you will deal with it if the market moves against you. Consider your risk appetite and the asset’s volatility when deciding on the magnitude of your trades. Smaller positions can reduce potential losses. Another way to spread your risk is to put your money into several assets. Thus, the overall effect of volatility on your investment portfolio is mitigated. You should pick assets that don’t move in sync with one other.
Embrace Options Trading
Options contracts allow buyers to purchase assets at agreed prices before fixed expiration dates. They also let sellers take the opposite view. Specific strategies extract profits from significant volatility without predicting precise directionality. For example, long straddles and strangles combine call-and-put options to benefit from dramatically rising or falling prices.
Although complex, options enable asymmetric payoff profiles. Contracts can be structured to define maximum losses while leaving room for uncapped gains if events like currency crises unfold. However, the flexibility of customizing risk and reward ratios comes at a steep cost. Prices depend on time remaining and volatility expectations.
Still, considering opaque pricing and margin requirements, thoughtful position sizing is critical.
Cultivating Discipline and Community for Trading Success
Emotions can run high in volatile markets. Maintaining emotional discipline is essential for avoiding rash actions motivated by fear or greed. Before entering a position, always weigh the possible return against the risk. Long-term success requires a favorable risk-reward ratio. TradingView also includes a special social component for traders. TradingView’s social community and network features offer traders a unique chance to join a thriving community of like-minded people worldwide to learn from, exchange ideas, and cooperate.
