How to prepare for volatility in 2025

Author: Marcus Ingram

As we move into 2025, many indicators point to it being a year of volatility.

From a geopolitical perspective, we have new governments in the United States and France and upcoming elections in Germany. Trump’s protectionist policies and trade war threats are creating uncertainty around the dollar and the currencies of major exporters, with the Mexican peso, Canadian dollar, and Chinese Yuan all recently impacted. Whether he’s bluffing or not seems secondary, as either way, the uncertainty will move the FX market.

As we saw recently, AI is ready to shake up the markets as the DeepSeek selloff damaged all other AI-related chip stocks and showed how quickly markets can respond. Couple this with the promised US deregulation, and we can certainly expect a shake-up in US stocks.

The cryptosphere is no stranger to volatility, but the actual effect of regulation remains to be seen. In the immediate term, it's hard to envisage markets stabilising anytime soon.

It’s difficult to imagine an asset class that is safe from volatility, so how can we prepare for the storm ahead?

We believe focusing on the following core categories can best set brokers up for success:

Strengthening Risk Management Systems

Rapid price swings can lead to margin calls, liquidity shortages and potential client losses. To prepare for this, brokers should:

Tailor Leverage and Margin

• Implement tiered leverage for volatile assets depending on the position size. This will allow your traders to simultaneously manage risks without sacrificing potential returns.
• Proactively tweak your leverage schedule and tiers around economic and political events, and volatile periods of the trading day.

On Liquidity

• Utilising multiple liquidity providers and aggregating can help brokers maintain tight spreads and deep order books.
• Monitoring market depth for each liquidity provider ensures orders are executed efficiently even during uncertain periods.

Dynamic Spreads and Routing

• Implementing variable spreads adjusted to the market risk at the time is an excellent option for managing risks during periods of high volatility.
• Invest in tech that allows spreads and A/B book routing to be scheduled before significant news events. In cases of unexpected volatility, it’s crucial to have the technology to react quickly.

Build up client education & support

It becomes even more essential to provide traders with the knowledge to navigate unpredictable markets through:

Market Insights & Alerts

• Provide market analysis through newsletters, educational content, and important data.

Improve Client Risk Management

• Encourage smart risk strategies like stop-loss and take-profit orders.
• Offer Negative Balance Protection to safeguard traders from the risks of leverage.

Customer Support

• Expand customer support availability and accessibility. Of course, it helps to have a tech provider offering 24/7 support and all the necessary information to respond to traders promptly.
• Implement real-time risk monitoring dashboards to detect any abnormal trading activity.

Adapting Business & Revenue Models

In order to carefully balance risk, it makes sense to accommodate different client types:

Diversifying Product Offerings

• Expand CFD offerings into less volatile assets like ETFs / bonds to appeal to risk-averse traders.
• Offer managed accounts (TFB PAMM) and copy trading for more passive investors.

Client Retention Strategies

• Loyalty programs and volume rebates can be a great way to retain and encourage traders to be active.
• Minimising latency to improve client satisfaction; optimise execution by refining the platform, hosting, and bridge

At Tools for Brokers, we provide technology that helps brokers stay ahead, covering all bases from execution to advanced risk management and automation.

For more insights or to learn how TFB can support your brokerage, contact sales@t4b.com. We’re here to help you navigate the next steps.