If you’ve been trading forex for a few years now, you’ll have noticed that the markets in general are more choppy than ever and the majority of the time they are rarely strongly trending.

Many pairs like the GBP/USD mow have a daily range of around 80 pips or less. That’s a far cry from a range of more than 300 pips a day back around the 2007 era.

Understand that when the market moves 200 to 300 pips or more a day it becomes child’s play to grab 50 pips simply because there is follow-through and momentum.

Contrast that in today’s markets…

Now what you see is a market run up 20 pips, then come back to the starting point, then maybe drop 15 pips and then without warning shoot up 50, then back down 30, then up 70 and just when you think there is a clear trend, it backs off 50 pips.

This make things so much harder and stressful!

Just look at a typical chart here…

 

This happens over and over again…

This is so frustrating as strong directional momentum is what helps lock in the big moves.

Sure if you use say a 4 hour or daily chart you’ll cut out much of the noise but… If you’re in a trade, you’ll still be fighting a nail-biting roller coaster of a ride that one minute is going really well and the next day you’ve given back most of your profits.

Why do I bring this up?

Because, odds are the trend following strategies you’re using are no longer valid most of the time and…

Making winning trades has become way more challenging.

So what’s behind these chaotic moves?

1. I think there is more uncertainty than ever before about the economy, the government, China trade agreements, the effects of Brexit etc…

All these things are constantly changing peoples views on the market direction and they are trading way more in a “Knee Jerk” reaction to every piece of news out there.

2. More important is the role of Algo Trading.

In case your not familiar with this, here’s the definition…

Algorithmic trading (also called automated trading, black-box trading, or algo-trading) uses a computer program that follows a defined set of instructions (an algorithm) to place a trade.

The trade, in theory, can generate profits at a speed and frequency that is impossible for a human trader.

What happens is that these algo programs are firing off hundreds and even thousands of trades in a blink of the eye during the day. They without a doubt are causing the rapid price jumps up and down.

If your getting stopped out you can bet many times it was due to Algo Programs.

So what can you do?

It requires a whole new mindset and view on how the markets are really moving in today’s markets.

It also requires new strategies to more actively look to make “Hit & Run Trades” instead of hoping that you end up with a big trend. (Keep in mind, clear trends happen only about 20% of the time.)

I’ll be teaching several new methods for successfully taking back control from the Algo Programs and will send details in the near future.

In the mean-time, please let what I just shared sink in…

Also realize that you weren’t imagining things when you were thinking things have become way more challenging in the past year.

I hope this gives you some food for thought and shines a new light on what really drives the markets.

Have a fun weekend!

Dr. J

Dr. Jeffrey Wilde
Since 2003 I’ve written 5 books on trading and taught over 14,000 students in more than 73 countries. I love sharing my knowledge and I’ve found by accident that mentoring others actually helped me become a more profitable trader.