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Market Updates Coach's Playbook volatility trading strategy Trading Education

How to Trade These Volatile Markets - The Coach’s Playbook

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Periods of high volatility can make or break a professional trader. They don’t come around very often, so understanding how to adjust your strategy to withstand the violent swings can go a long way to keeping you in the game.

If you’ve never seen markets like this, then you might be feeling a little anxious about jumping in. We get it. Every trader is different. Some embrace the volatility, and others completely avoid it. There’s nothing wrong with sitting it out when things get crazy, but there’s also a lot of opportunity when the markets really start to move.

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Manage Your Risk

With great opportunity comes great risk, so proper risk management is very important. It’s been a long time since we’ve seen moves like this. In case you’re a little rusty, here are a few tips to help you manage risk a little better when volatility spikes.

  • Trade smaller - cut your size in half
  • Keep emotion out of it - don’t fall in love with a position
  • Take profits - take what the market gives it
  • Be patient - there will be another trade

The last thing you want to do at times like this is turn a winning day into a losing day. Manage your money appropriately so you can walk away with a few bucks in the bank. Chasing bad trades will not work in this environment. The swings are too big, and you probably don’t have the margin to hold out for a pullback.

Keep a level head, this is not the time to fall in love with a position. These markets are moving fast, and they are very unforgiving, so accept when the market is telling you that you’re wrong, then move on to the next trade. Quick in, quick out is the name of the game right now.

Volatility is here for the foreseeable future, so make sure you save a few bullets for tomorrow. Don’t let one bad day blow you out. Always trade for tomorrow!

Trade well.


Posted by TopstepTrader on February 26, 2020
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