How Volatility Gives Effects On Trade?
Investors, especially those using online brokers, should know that during times of volatility, many companies implement procedures designed to reduce the company’s exposure to exceptional market risks. For example, in the past, some market maker companies have temporarily suspended automatic command execution and handled orders manually.
How assets are executed when volatile and high volume prices are also different in other ways. Here are a few things to keep in mind:
Delay – The volatile market is associated with high trading volume, which can cause delays in execution. This high volume can also cause execution to occur at a price significantly different from the market price quoted at the time of the order. Investors should ask the company to explain how the market maker handles execution of orders when the market moves volatile. With the development of online trading, we expect quick execution of prices at or near quotes displayed on our internet enabled devices. Note that this is not always the case.
Mayhem Digital – You may have difficulty in executing your trades due to system capacity limitations. In addition, if you are trading online, you may have trouble accessing your account due to the high level of internet traffic. For this reason, most online trading companies offer alternatives such as telephone trading or talking with a broker over the phone to place an order.
Requote – There is a significant price difference between the quotations you receive and the price at which your trade is executed. Remember, in a volatile market environment, even real-time deals may be far behind what’s currently happening in the market. In addition, the number of available stocks with a certain price (known as the offer) may change rapidly, affecting the possible quoted price available to you.
The type of order you choose is very important when the market is not moving in their normal way. The market order will always be executed, but in a volatile market you may be surprised at the price you get, which can be very different from the quoted price.
In a volatile market, limit orders are the best option. An order placed on the brokerage to buy or sell on the amount of the designated asset, and at / or better than the specified price. Limit orders may be slightly more expensive than market orders, but it is always a good idea to use because the price at which you will buy or sell the assets is set. On the downside, limit orders do not guarantee execution.