How to Trade Large Volumes Better in the Forex Market
While the forex market may be dominated by the U.S. Dollar (USD), this remains a diverse, global entity that sees huge amounts of capital traded on a daily basis. As of January last year, an average of $5.3 trillion was traded on the foreign-exchange during each 24 hour period, and while this may represent a dip from the markets peak it highlights the liquidity and level of opportunity that exists within the sector.
Trading High Volumes in the Forex Market: How to Do It More Efficiently
One of the ways in which experienced investors leverage this opportunity is by trading in high volumes, usually within a short period of time and as a response to a specific economic or geopolitical trend. This is a challenging discipline, however, so here we will consider the key steps that will enable you to become more efficient in this respect: –
- Trade Online and Through Your Mobile Device
Trading in high volumes is usually reflective of a short-term outlook, and it is commonly used by day-traders who are looking to profit during a 24-hour period. The short-term, and often real-time, nature of high volume trading means that you will be require to operate through an online platform or affiliated mobile application, as this ensures that you have live access to the market and can time your orders accordingly.
Online platforms such as FXPro are particularly effective, and not only because it is affiliated with advanced mobile apps like Metatrader 4 and 5. This resource also has a comprehensive range of real-time analytical tools, helping you to gain an in-depth understanding of the market and optimise the impact of your high-volume trades.
- Consider Leveraging HFT Algorithms
In recent times, experienced traders looking to optimise their returns have committed to a concept known as high frequency trading (HFT). This is based on advanced algorithms, which identifies opportunities and has the capacity to complete thousands of real-time trades in a matter of minutes. While this practice has been criticised for triggers waves of volatility in the market, however, it remains extremely lucrative when it is executed in an informed and compliant manner.
The latter point is particularly important, particularly as a number of independent regulatory bodies (including the FCA) have looked to clamp down on this practice and negate its impact in the market. You must therefore seek out or create HFT algorithms that do not create disorderly trading conditions, while it is also crucial that you test all software thoroughly before making a commitment.
- Use Volume as a Key Indicator of What Decisions to Make
When experienced traders look to buy and sell in high volumes, they often focus on how to optimise the impact of their transactions. This can cause them to lose sight of the fact that volume is also the second most important piece of data after price when appraising an asset class or market, and in this respect it can be actively used to influence the decisions that you take.
So rather than simply looking at how to complete a large number of effective transactions within a relatively short space of time, try to utilise volume as a key metric that can help you to determine trends and potential reversals at any given moment. This will ensure that you trade in high volume more effectively, particularly in a constantly changing market such as the foreign-exchange.