How Can Brokers Equip Traders to Handle Market Volatility?
The CBOE Volatility Index (VIX), which is considered the barometer of market volatility, spiked to an almost record high of over 65 in March 2020, in sync with the pandemic outbreak. Although the index declined through the rest of 2020 and in 2021, it surged more than 87% in the first half of 2022. VIX is commonly known as the “fear index,” reflecting the fear of uncertainty among investors.
News of geopolitical tensions, economic slowdowns and changes in government policies can lead to fear of uncertainty, triggering volatility in the financial markets and making traders exit positions or remain on the side-lines till the volatility subsides. During such times, traders need to be motivated and reassured to continue trading. There are a few effective ways to do so.
Providing the Right Set of Tools
Volatility Analysis: Even during long periods of high volatility, there are times when markets are calmer. A tool that offers traders a visual representation of expected volatility in various assets can help them plan their trades when volatility subsides.
Identify Trading Opportunities: Brokers can integrate tools on their site that present exciting trading opportunities, based on deep technical analysis. These can also be shared as trading alerts via email.
Risk Calculator: This enables traders to determine their risk exposure and modify their strategies based on their risk appetite and desired risk-reward ratio.
High Probability Trade Set-Ups: Providing high-probability trade set-ups can help traders easily identify recurring tradable situations in their chosen assets.
Trade Validation: A tool that can highlight the quality of the pricing and execution of a trade can prove highly useful when there is high uncertainty in the market.
Integrating the right set of tools into the website can enable brokers to inspire traders to continue trading during volatility or an overall market decline.
Continued Communication is Key
Education-Based Content: Sharing relevant and relatable content via email, social media posts and newsletters can reassure and inspire traders. They need to understand that volatility presents more exciting trading opportunities than a flat market, the different strategies for trading during high volatility, and the best risk management techniques to adopt.
Push Notifications: Market commentary and summaries of market analysis can be sent via SMS to traders directly on their smartphones. Enabling traders to monitor their assets and adjust their strategies with ease, anytime and from anywhere, can help them feel much more in control.
Market Reports: Sharing detailed market reports can help traders better understand the workings of the financial markets, choose the right assets and hone their trading skills. These reports can also provide details of major market indicators, upcoming market moving events and expectations for them.
While communication is essential, it needs to be multilingual to address a global clientele. Communicating in a trader’s preferred language can keep the conversation relatable and sensitive. This goes a long way in building trust, which is even more critical during periods of high market volatility.
The fear of uncertainty can make traders extremely nervous. Autochartist offers easy-to-integrate cutting-edge tools that help brokers earn trust and offer traders an edge in the financial markets to encourage them to continue trading. Contact us to learn more.