Is volatility bad for Forex traders?
Not necessarily, it depends on the kind of volatility.
The volatility that we saw on the Forex market about one or two months ago (triggered by the debt crisis on Greece and other European countries) wasn’t good for us. Regardless of the type of trader you are, its difficult to profit from the market when it goes up and down like a rollercoaster, with wild swing and giving no prior notice about when the market is going to turn around, it just did without prior notice. During these market conditions we need to be careful, be sure to manage our risk and trades effectively.
What about the volatility in the last two weeks? That’s the volatility we need to profit from, the market still goes up and down, but with clearer moves, it reacts to important support and resistance levels and that’s what makes this type of volatility tradable. When we know what the market is likely to do in the following hours/days we just need to find the timing, the right moment to enter our trades. It looks like if the market is just waiting for any reason (poor numbers (or good ones) on fundamental releases, debt rating downgrade, etc for the market to move on one direction, but on this kind of volatility we know where the market is likely to head.
So if you have the opportunity to trade during these days do it.
Don’t forget that the interest rate announcement is released later today!