4. Volatility related Stop
Price volatility can also be used when placing a Stop loss order. During active hours & high market volatility, traders should place stops further than usually to avoid seldom price noise and react only to major price changes. During the periods of a low market volatility, protective Stops should be placed closer in order to react in time should the market accelerate.
One of the good technical tools to measure price volatility is Bollinger bands indicator.
Let's take a look at the following example:
Price volatility can also be used when placing a Stop loss order. During active hours & high market volatility, traders should place stops further than usually to avoid seldom price noise and react only to major price changes. During the periods of a low market volatility, protective Stops should be placed closer in order to react in time should the market accelerate.
One of the good technical tools to measure price volatility is Bollinger bands indicator.
Let's take a look at the following example:
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