8 Keys to Profiting as a Trader During Volatile Market Conditions

There is soooo much opportunity during volatile market conditions and you are not capturing it.  You hear stories of how much money traders are making.  And you are not one of them.

This can be *very* frustrating.  I hear this from traders of all levels when they are not cashing in when volatility jumps.

Often the reason is their approach during such market periods.  Traders are not preparing properly nor focusing on the right instruments and indicators.

Let’s offer eight keys to profiting as a trader during volatile market conditions so you can grow your trading account.

1)  Do not try and do too much

Often I find traders trying to do too much during such periods.  Before such trading sessions, I pull our developing traders into our training room, and give them their cheat sheet to proper in such markets.  My first words of advice are to watch a small and select group of market and volatility products.  If you try and do too much, you will do too much poorly.  If you stick to what you can watch closely, then you will trade much better.

2) Trade the volatility and market products

Trade VXX, UVXY, SPY, QQQ.  For developing traders, these products should be your focus.  This is what we encourage our developing traders on our desk to trade.

3) Watch the indicators that matter

Watch $TICK, $ADD, $VIX.  These are the indicators that will help you make better trade decisions on the direction of markets and volatility.

4) Momentum trade market and volatility products

Trade Move2Move and in-and-out.  Take profits and wait for the next setup.  When the products are strong, get long and take profits when they stop trading higher.

Scalping works very well in this environment.  I pulled one very experienced trader aside during such a market period and encouraged him to momentum trade and scalp market and volatility products.  The next day, I heard this trader laughing on the trading desk about very quick profits after scalping.  He roared, “All you have to do is scalp these products and you can make huge profits.”

5) Treat the trading day as three separate trading sessions

Attack the open, midday and close differently.  The open ends around 11 AM and the close starts around 2:30 PM.  Expect a choppy market midday unless your indicators are clear in direction.  Watch for footprints from big players to enter near 2:30 PM and view this as a distinct session.

6) Key levels are key

Respect key longer term technical levels.  Take profits into these key levels, and exit intraday positions until they break.

7) Do not expect to be perfect 

You are going to miss trades.  I work with one prop trader, who missed a huge trade during a volatile session, but quickly reset and put up over 500k for the trading session.  There is too much in potential profits available to fret about a missed opportunity.

8) Have fun!    

These market opportunities make us better and speed up our learning curve.  If you can momentum trade market and volatility products during a market period of elevated volatility, then you can trade just about anything.  These are the days that we live for as trader.  They test and harden our trading skill.  Enjoy them!  And if you do, your results will be significantly better.

Related video

How to trade when volatility explodes

*no relevant positions