The Forex industry is performing in a global scope and it is affected by the events around the world. One of the most difficult things in the FX market is to predict the way that the market goes after a major series of news. Especially most of the retail traders, relatively small investors of the FX world, cannot figure out the fast markets.
Characteristically, fast markets are associated with an accelerated number of transactions. It occurs when there is a market correction or a sell-off trend, which may result in sharp changes in the prices. The mortgage crisis was one example of how people cannot react to a fast market.
The panic has driven people to an unguessable sell-off and the retail traders could not survive in that tailspin. If you wonder how you can protect yourself in a fast market, there are two majors tips to follow.
Be Careful While Working with B-Book Operators
B-book operators are acting as market makers and executing the clients’ orders internally. What they do is to take a position against your trade and get a profit being equal to your loss. When a shocking event happened and the prices started to free-fall, it means that they make a profit from your loss. In that case, they usually widen the spreads and stop accepting the trades.
If you try to give an order by calling, they usually do not answer. To avoid that situation, you can try to work with an A-book operator. Their main resource of profit is commissions and spreads. Therefore, they have less incentive to stand against your position.
Be Aware of Limit Orders
If you are one of those only operating at market prices, your attention should always be at the highest level. However, you are a human being and there may be some other things to focus on besides trading. While you are taking care of something else, there is a possibility of a change in prices in a devastating way.
For example, Bitcoin’s price has experienced a huge dip on January 20, which costs nearly 15% loss for its owners. If someone had put a sell limit order at the price above the dip, they probably would have covered some of their loss. For retail traders, limit orders may serve as a weapon to stop huge losses in the case of breaking news.