The Death of Volatility & How to Overcome It

We can not make money as traders if the markets don’t move, can we?

Well, let’s look at what’s happening as of August 16, 2014.

NZDUSD Daily Chart

For NZDUSD, the last 13 days in a row the price has moved very little in any direction. (Look at the price action in the small lower box).

However, on the preceding 13 days price had dropped quite a bit. This shows a significant difference in the market environment as price is indecisive and does not move in the same direction for long.

USDCAD Daily Chart

USDCAD, same logic as the upper picture: Last 13 days the price has moved less than on the preceding 13 days.

I guess you got the point that with these 2 pairs:

  • It will take more time for you to get your profits or losses, meaning that your trading during these last 13 days is not as time-efficient as it could have been previously when the markets were more volatile.
  • As markets range rather than move in any single direction, you can not move your stop to breakeven very fast, keeping open the possibility of the market touching your pockets.
  • As the market does not move in one direction, adding to your positions is also much more difficult or even not recommended because in case the market starts to range you will just keep getting stopped out (with a loss! Not at breakeven).

So what can us, who chase for big moves, do then?

Either do not trade or find what moves the most, of course!

GBPUSD Daily Chart

For the past 13 days GBPUSD has been dropping quite decently. Pretty different from the 2 charts ( NZDUSD & USDCAD) above, yes?

GBPCHF Daily Chart

GBPCHF fell down as well!

You get the point that some pairs have moved, and others have stagnated? How do we find the pairs that are moving?

One tool that I like to use is Forex Factory’s Composite quote section under the Market tab.

I look at the 60M pip change, and 6H pip change, and the pairs with the highest numbers (doesn’t matter whether positive or negative) I choose to keep an eye on. It does not have many pairs on the list, so an alternative is Myfxbook’s Volatility section under the ‘Market’ tab.


This Myfxbook’s  ‘Market Volatility’ page is more complex and advanced, but has more pairs available.

As far as I know, usually December, July and August tend to be the least volatile months but this is vague knowledge and using more exact, real-time volatility tools to determine which pairs move the most at a mere glance is much better.

The underlying question

The underlying question is whether you want to trade during low volatility periods. If you do, looking at volatility tools, determining the pairs that move the most and then trading these might be the right thing to do to adapt to these market conditions.


No movement= No money to be made= No point in trading.

Therefore, either

  1. Find what moves and trade what moves.
  2. Focus on more long-term trades
  3. Practice analysis skills, learn or do something else trading related.

Or just take a break from FX and do other things in life until the volatility comes back because trading low volatility is more risky and less time-efficient.

This sums it up,


SpacePip’s TradingCave↓

Twitter: @cannamellia



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