Lately, volatility has been off the charts. We’re seeing triple-digit swings in stocks, and the market is getting a real taste of the wild ride that comes with a president who makes game-changing announcements almost daily. These moves don’t just shake up the U.S. economy—they send ripples across global markets.
If there’s one thing to take away from the past few weeks, it’s that volatility isn’t going anywhere. Learning how to navigate these unpredictable markets is no longer optional—it’s a necessity.
Having lived through more than a few chaotic market cycles, I’ve picked up some hard-earned lessons. And let me tell you, trading during extreme volatility is nothing like those YouTube videos promising you can turn $500 into a million overnight.
Markets don’t move smoothly from one level to another. Volatility is more like the famous Mike Tyson quote:
“Everyone has a plan until they get punched in the face.”
Lesson #1: Reduce Your Size
If you’re trading leveraged products like Forex or CFDs, you can lose half your account in minutes during fast markets. If you are trading prop accounts, your drawdown limits could be hit quickly. That’s why rule number one is simple: cut your position size.
Yes, I’m serious. It may feel ridiculous to trade micro contracts for example, but trust me—it’s the best decision you’ll make when markets go haywire.
Sure, there are traders out there who thrive in volatility, raking in massive gains by increasing size at the right moment. But let’s be real: You’re probably not one of them. Most traders think they’re the next George Soros, but in reality, we’re all just George Costanza—panicking, second-guessing, and getting whipsawed into oblivion.
Unless you’re trading at micro size, your account might not make it past lunchtime.
Lesson #2: Widen Your Stops and Targets
Fast-moving markets require bigger stops and wider targets. A good rule of thumb: for every 1% move beyond the average daily range, widen your stops and targets by 0.5x.
For example:
If the stock market’s normal daily range is 1% but swings to 5%, your stops and targets need to expand by a factor of 2.5.
This isn’t a perfect science, but like duct tape, it works well enough to keep you in the game.
Lesson #3: Turn OFF Your Robot EAs
Retail trading robots or EAs aren’t built for high-volatility markets. Even if they pick the right direction, they’ll often get stopped out before the trade has a chance to work.
There’s nothing worse than watching your robot stop you out five times in a row—on trades that should have made you money. It’s a special kind of torture that only extreme markets can deliver.
When things get crazy, trading becomes less of a strategic game and more of a high-frequency trading pinball machine. Ironically, when machines take over the market, the best move is to turn yours off.
Volatile markets aren’t the time to show off. The glory is short-lived, the wins fleeting, and the losses brutal. Survival should be your number one goal.
You’ll walk away feeling much better if you make it through the storm unscathed—rather than trying to be a hero and getting wiped out in the process.
Stay smart, stay disciplined, and most importantly—stay in the game.