Storm Warning in Effect

STORM WARNING IN IN EFFECT VOLATILITY IS SOARING- TRADERS TAKE WARNING Know your limits in volatile conditions. EUR/CHF Debt fears spread to other Eurozone countries Cumulative 7-day volatility Banking crisis forces Lehman Brothers default Greece triggers Eurozone debt crisis Subprime meltdown initiates global credit crunch- Sept 2002 2008 Sept 2011 STORM PATTERN REPEATING? Exchange rate volatility spiked just before the 2008 recession, then returned to more typical levels. Extreme volatility has returned to the currency markets, which could mean we face another economic storm. FOREX VOLATILITY SURVIVAL GUIDE If you find yourself engulfed in a sudden market storm, follow these essential safety practices: Chart a strategy to avoid obstacles A clear strategy helps traders cope with market volatility and its associated E risks. At times of extreme volatility, limit trading to one or two currency pairs and research the factors that impact exchange rates for these currencies. Reduce sail when a storm approaches Flying too much canvas in high winds may cause sailboats to capsize. Likewise, trading with excessive leverage may accelerate losses and place your entire account at risk. When volatility is high, use lower leverage to reduce the risk of oversized losses. Keep your head above water Volatile markets are the rough seas that threaten to swamp your trading account. As price volatility rises, so does the risk of a margin call on trades close to the edges of market peaks and troughs. Be sure to maintain sufficient margin headroom to avoid having to close open positions when volatility intensifies. Seek a beacon in the dark A lighthouse is a guide to the coastline; tools like the OANDA OrderBook are a guide to market sentiment. The OrderBook aggregates all open positions, and pending orders, in OANDA's market to illuminate trading patterns, price trends, and the curve of resistance and support levels. Drop anchor until the storm passes In times of intense market uncertainty, use judgment before entering a trade. Traders with low risk tolerance should close open positions or even suspend trading activities until calm is restored. Be sure to include stop loss instructions for any open positions- especially if open positions are not being monitored. When setting stop loss price levels, leave sufficient space from the market price to ensure stop losses are not triggered inadvertently. OANDA OANDA is an online provider of foreign exchange trading and currency information services. Visit us at www.oanda.com. © 1996 - 2011 OANDA Corporation. All rights reserved. Data sources: OANDA fxLabs"