The essence of volatility is that leaderboards often change within a short period of time. These fluctuations could be as a result of funding spikes, CPI prints, or illiquid cryptocurrencies, which can bring a significant profit (or loss) in a very short amount of time. When trading in a high volatility tournament, predicting the market is not important — what is crucial is positioning yourself correctly to make profits along the way. You will learn the basics of high volatility tournament strategy, including size, placement, fading vs following, and reading the scoring model to minimize risks.
High volatility increases the dispersion of results. A move that yields 3% under normal conditions can generate a return of 30% in an unprecedented situation. Therefore, it is very easy to change positions in a competition when there are few players who can benefit from it. At the same time, volatility can eliminate other players from the competition, as it gives much more opportunities to make money than in calm times.
You need to understand how to manage your account and limit its drawdowns during a high volatility tournament.
The size of trade is usually the main thing you need to manage, so it's important to size down before entering any position.
You can size a position according to its expected market movement. When a pair's traditional movement range doubles, you need to size a position down at least to a third or a quarter of its usual size.
It is necessary to calculate the potential losses and verify whether they will affect your total account.
When the volatility is high, a stop-loss needs to go outside the noise range — past the last swing, beyond the average true range, etc.
Different kinds of behavior will provide different results in high volatility tournaments.
What are the styles used to trade in volatility tournaments?
On BuyCrypt, volatility is intentional with certain tournament formats consisting of volatile pairs since it limits the skill differences into a short time frame leading to fluctuations in scores. In 48 tournaments we have held by now such that we run about 54 of them every week, players get lower-cost opportunities to keep on practicing under the same conditions that the present guide describes: sizing with larger ranges, putting invalidation levels beyond the noise zone, and adjusting one’s style of trading to the rules of the scoring model.
Like it is a simulation on real market data, you will be able to learn how to deal with volatility spikes even without risk to your own funds allowing you to use the same discipline of size and style in the paid trading process on our platform which starts with $5 as well as free access to a funded account midway showing an 80% profit sharing; we have already paid out $384K for 127 funded accounts based on this process. It is a fact that discipline of size will become automatic due to free tournaments with no deposits where you can train to trade in volatility several times as you need until size discipline becomes natural.
BuyCrypt is the game of skills rather than trading and investment. Trading is risky and no results guaranteed.
Sure, but do not enter positions during the release. At the beginning of a press-release or meeting when the results are published the market is unable to give you adequate liquidity causing price shoots and volatility spikes. In fact, the correct way is to react when volatility stabilizes, develops a horizontal channel where trades are placed at retests with stops behind.
Make up the position sizes taking into account the expected moves instead of habits. If volatility doubled, the sizes must be cut down by half maintaining present equity risks. In cases when volatility increases 2-3 times from a normal baseline, players usually cut sizes by 2-3 times. You can check that by calculating potential losses of your position.
Yes and no at the same time. Volatility may increase your position many times if placed correctly, while losses are also possible.
Just wait for the results of the tournament since in cases were we are talking PnL, momentum plays winning cards.
Use wider stops when trading with no increase of risk since it limits invalidation and allows you to make smaller trades as well.
Use BuyCrypt — take part in free non-deposit tournaments during which you can learn size adjustment, invalidation placement, and strategy selection.
