{"id":648758,"date":"2025-01-24T14:00:11","date_gmt":"2025-01-24T13:00:11","guid":{"rendered":"https:\/\/ftmo.com\/?p=648758"},"modified":"2025-01-24T14:05:34","modified_gmt":"2025-01-24T13:05:34","slug":"effective-risk-management-using-volatility-and-technical-indicators","status":"publish","type":"post","link":"https:\/\/ftmo.com\/en\/effective-risk-management-using-volatility-and-technical-indicators\/","title":{"rendered":"Effective risk management using volatility and technical indicators"},"content":{"rendered":"

Successful trading in the markets requires not only the ability to analyse the market situation correctly, but also a solid risk management system. The strategy we will describe today combines two key approaches: using historical volatility in pips and technical indicators to determine market direction, allowing traders to effectively manage risk and increase the probability of success.<\/em><\/p>\n

The basis of the strategy is to adjust the Stop Loss (SL) based on average daily volatility, minimizing the risk of the SL getting triggered by normal market fluctuations. However, to ensure that trades are opened in the right direction, we use a combination of the RSI indicator<\/a> to identify overbought and oversold zones and moving averages<\/a> (MA).<\/p>\n

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Thanks to these elements, the strategy provides traders with a tool for day trading and medium-term speculation, where the emphasis is on capital protection, precise timing of entries and achieving consistent results.<\/p>\n

Using indicators to determine direction<\/h2>\n

Indicator 1: RSI<\/h3>\n