One of the most cursed situations in the realm of financial trading is an extremely volatile market. Although there are some traders who relish trading this kind of market, most traders actually fear trading in a volatile market. So what is volatility? In simple terms, volatility is just a measure of how much the price of an asset will fluctuate over a period of time. In other words, the greater the rate of change during a given time frame, the higher the volatility.

Some of the ways which volatility can be measured is through the use of technical indicators like:

• Average True Range

• Bollinger Bands

•

• Elder Rays

Reasons For Fearing Volatility?

Volatility is feared by many traders simply because the wild price swings that give rise to the potential of lucrative profits can also give result in huge losses. This is because during periods of wild price swings, trades in spot forex and futures are more likely to get stopped out or result in margin calls.

However with binary trading, there is no risk of a trade getting stopped out as stops do not exist for binary options. A binary trade just has two possible outcomes. Furthermore, losses are just limited to the amount that is invested. So the fear that traders will have with volatility is unfounded with binary trading. In actual fact, volatility is good for binary trading chiefly because of the fact there are movements in the price of an asset. Without any price fluctuation, the chances of an option hitting the “Up” or “Down” price are greatly reduced. The worse case is when prices are just trending sideways with very little range.

Trading Volatile Binary Underlying Assets

It goes to reason that if a trader wants volatility, he should trade with assets which are higher in volatility. As with spot forex, the best binary assets are those which are related to currencies. Major currencies pairs with high trading volume such as EUR/USD, GBP/EUR or USD/JPY are most likely the currencies pairs with higher volatility. Try to isolated breakouts points with technical tools such as MACD, RSI and Stochastic. Once the trading conditions are ideal, make the trade and just wait to close in the money. For those traders who can tolerate higher risk, go for 60 second options as the increased frequency of trades will greatly boost profits.