Hang on, it's a wild ride

I doubt very much I need to point out how volatile the forex market has been since the end of last year. It's as though we haven't pulled out of "holiday trading." Fear not as this market is far too large now to stay this way very long. So, what do we do in the meantime? You have a few options; one of which is NOT quitting! If the volatility is too extreme for you or you've had some losses and lost confidence, DON'T just leave your computer alone for a month and then come back. There's nothing worse in trading than losing that consistency. Sit down, open your demo account and learn how to trade these conditions. Even if you don't master it you will stay in the loop. Taking too much time off from looking at the charts and hearing the news will kill your relationship. Even a few minutes a day will keep you connected an in tune.

Now, for those of us who are trading this market with our live accounts. There is money to be made here. In fact, these days we can make in a few minutes what often takes a few hours. The downside is that wild, unexpected moves can work against us too. The name of the game is cherry picking. Each morning you need to sit down, analyze any and all pairs you plan to trade and mark the important levels of support and resistance with the line tools. If the market seems to be keeping its ranges, we need to buy at the bottom and short at the top. Sounds easy enough; here's the catch. Your window of opportunity is small, maybe only 30 seconds or a minute.

I saw EUR/USD rallying strong to its 1.3230 resistance today and was ready to short. I second-guessed myself and missed a huge winner. The reason I should have pulled the trigger is the great reward:risk. If the range breaks and I short at 1.3230, I probably lose 20 pips with a stop at 1.3250. However, if that resistance holds I know the following 10 minutes will probably give me 80 or 100 pips. So shame on me for not taking a little risk.

The point is, in cherry picking, we have to wait for a perfect entry price, have the guts to pull the trigger and know the risk is only 15 or 20 pips. If you trade at these levels without a stop you are begging for a beating. When these S&R levels do give way, they move just as quick as the failures. You'll be down 80 pips in 2 minutes wondering what the heck just happened. Don't be that trader. Play it smart, trade lightly, and we'll see some awesome moves really soon. This choppiness won't last so don't throw in the towel and miss the next great wave.