Trading during crisis may be dangerous, but it can also give you a great opportunity to gain more profits if you do it right. Crises are rare hence people tend to forget about it and start thinking that they are rarer than they really are.

It is very difficult for most people to make the mental shift between "normal" and "crisis" until they see the danger coming right at them. For modern humans, that is not enough. We face dangers that cannot be "seen" up close until it is too late, even though we have the intellectual tools to understand them and the technology to defeat them.

The coronavirus pandemic of 2020 may be an excellent example of this. It might have stopped in China, only if the government acts faster than in reality. Because financial markets are driven by human buyers and sellers, financial markets also operate in two modes; “normal” and “crisis” markets. 

For successful trading during crisis in the market, a trader needs to be able to know when the market is being driven by a crisis and whether there is any reason to panic or just a minor one.

Then, successful traders need to apply different trading rules for each different type of market. It is important to distinguish between a relatively minor crisis and a genuine panic, which I call the "world crisis". Through the Didimax forex broker, you will be taught some important things when faced with a crisis.

Knowing When You are in a World Crisis or not before Trading during Crisis

There are two simple rules to use that will tell you whether you are in a real "world crisis" or just a minor, more normal crisis. The first rule is, does the market move consistently with abnormally high volatility?

You can measure this by applying the long-term average actual range indicator and comparing it to the daily ranges of the stock, Forex, and commodity markets. If the current range holds for several days at levels well above its long-term average, and the stock market is largely down, then it is clear that a major crisis is afoot.

The second rule isn't math, it's emotional - have everyone you know who follows the news get scared. When you have conscious people talking like this and sending the stock market crashing with extreme volatility, you really have a world crisis.

Tips that Traders Can Do

Trading during a world crisis is very dangerous, but also potentially very profitable. Here are some tips from the best forex broker that a trader can follow so that they are not only profitable but also to avoid exploding their trading accounts:

1. Estimate the daily market movement at least as big as the largest daily movement since the crisis began.

2. It is possible for the stock market to fall by 50% in just a few days.

3. The world crisis is the only time when it makes sense to cut the stock market. During a more normal, moderate crisis, short-sellers are likely to find themselves trapped by dip buyers.

4. The part of the world crisis that provides the best trading during crisis opportunities is the first few weeks. In fact, the first days of a crisis are the best time to open new trades.

5. Keep trading position sizes small. This is very, very important. It is very tempting to open a big trade as if you were right, you will make a lot of money. Do not do it. Adjust to a very high volatility factor.

It is important to know that you have to wait for a valid entry signal on the hourly chart and then be followed by the same on the shorter time frame chart. The crisis will end, but you must still prepare yourself for trading during crisis so you will not experience big loss.