2020 has given us an insanely volatile market. It’s a crazy time in history.
I think it’s safe to say that no one alive has experienced anything quite like the combination of events happening around the world right now.
No doubt, a lot of what we’re experiencing has been painful. But I’d be lying if I said the current stock market wasn’t the most amazing I’ve ever seen in my career.
If you’re following any successful traders on social media, you’re probably hearing the same thing from them. We’re in a trader’s market, folks.
The volatility has been wild. Stocks are making BIG moves … And there seems to always be another stock lined up ready to spike.
With all these opportunities, I think it’s important to remind less-experienced traders that these are still uncharted waters … and the accompanying uncertainties can make things very dangerous for your account if you’re not prepared.
So today I’m gonna dedicate this blog post to 14 Tips for Trading in This Highly Volatile Market. What you don’t know can seem scary. So here are my top tips for you for this market — and any market really.
And be sure to catch my bonus tip for you on how you can better navigate the wild moves.
Table of Contents
- 0.1 #1 Keep Those Losses on Paper
- 0.2 #2 Track and Learn
- 0.3 #3 Go Small or Go Home
- 0.4 #4 Wider Stop Losses
- 0.5 #5 Stick to Your Plan
- 0.6 #6 What Do the Charts Say?
- 0.7 #7 Don’t Fight the Volatile Market Trend
- 0.8 #8 The More Time Frames the Better
- 0.9 #9 Use the Right Tools
- 0.10 #10 In a Volatile Market, If Things Are Going Well … Take Profits
- 0.11 #11 Winners Are Fashionably Late
- 0.12 #12 Don’t Focus on What Got Away
- 0.13 #13 Stick With What You Know
- 0.14 #14 Know When to Walk Away
- 0.15 Volatile Market Bonus Tip!
- 1 The Volatile Market Wrap
#1 Keep Those Losses on Paper
Like I said, no one’s been in a market quite like this one.
If you’ve NEVER been in a volatile market — that could be a disadvantage. Experience helps.
So if you’re new to all this, one of the smartest things you can do is paper trade.
A lot of the stock movements we’re seeing are big and FAST. Paper trading is a great way to practice and build confidence without risking your capital.
Consistency is key to trading this market well … so don’t knock the idea of exclusively paper trading for a while. It may be what you need to practice and build momentum.
#2 Track and Learn
If you’ve been following me for a while, you’ve heard me talk about the importance of tracking your trades in a journal. (BTW, you can hang with me every morning premarket — here’s how.)
You should keep a journal in any market … it’s especially critical for you to track your trades in this market. A lot of stocks are moving differently — and for different reasons.
Tracking your trades will help you learn a lot more effectively. And it’ll allow you to be intentional with your adjustments.
Let’s face it … So much goes into learning how to day trade. There’s no way you can remember it all. That’s what your journal is for.
#3 Go Small or Go Home
It’s true … We’re seeing so many great stock moves in the market right now. And even if you miss out on a trade, another one is probably coming soon.
Unfortunately, more opportunities for wins also mean more opportunities for losses. If you’re not careful, you could easily blow up your account.
Limiting your risks is important if you plan to stay in the trading game … One way to do that in this volatile market is to reduce your position size.
Smaller position sizes protect you from large losses. They can allow you to have more chances “at bat” so that you can continue to improve and build up consistency.
#4 Wider Stop Losses
The wild price swings in this highly volatile market show the conflicting opinions between buyers and sellers.
This uncertainty can create a lot of emotional trading … and as a result, traditional trading rules may not work. In fact, the strategies you generally rely on may not work as well.
During these times, don’t throw your rules out the window … Instead, recognize that panic triggers irrational moves and that you need to make adjustments.
One thing you can do is change your stop loss placement to wider than usual … That’s so you don’t get stopped out of your trades so early.
Also, don’t just pick your stop loss out of thin air. Look for strong support and resistance levels for your stop losses so you can have more confidence in your trading plans.
#5 Stick to Your Plan
Top traders find ways to keep emotion out of their trades. Sounds easy … It’s not.
A highly volatile market can lead you to make emotional errors — whether from excitement or panic.
More so than ever, don’t even think about entering a trade until you have a set trading plan. Once you open a position, monitor it carefully — and stick to your plan!
#6 What Do the Charts Say?
It’s a weird market out there. The coronavirus pandemic shut down a good chunk of the global economy … and businesses continue to close.
If you’re trying to use fundamental analysis to trade in this market, you’re probably gonna pull your hair out.
#7 Don’t Fight the Volatile Market Trend
If you’re a member of the SteadyTrade Team, you’ve heard me talk about trading with the trend.
We went deep into the concept when we studied this book on this episode of the SteadyTrade podcast book club. Trading with the trend basically means trying to catch gains through the strength of a stock’s momentum in a particular direction.
For example, if a stock has been heavily bullish for a couple of weeks … you don’t try to short it. And if a stock has been dropping for a while, don’t try to buy the dip until you’re absolutely sure the trend has reversed.
Trading with the trend can be a great way to lower your risk. You’re potentially leveraging a stock’s existing long-term momentum that’s more likely to continue.
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#8 The More Time Frames the Better
Another way to lower your risk is to look for confirmations on charts using multiple time frames.
If you see a setup forming on a one-minute chart for a particular ticker … check to see what the five-minute, 15-minute, one-hour, and even daily charts show.
Do you see the same thing happening? Do other time frames tell you something different?
If multiple charts show you the same setup, it can make it more likely that setup will work.
#9 Use the Right Tools
We’re so lucky to trade with technology on our side. When you pair technology and the human brain, the results can be incredible.
That’s what our latest StocksToTrade platform feature is all about. Two highly seasoned Wall Street veterans scan for catalysts that can make stocks move and alert Breaking News subscribers. And if you’ve been paying attention, the moves in the market are INSANE.
This new tool is incredible. Take it for a spin — get the details here.
#10 In a Volatile Market, If Things Are Going Well … Take Profits
Don’t be afraid to take profits quickly and incrementally to keep your gains safe in cash.
Staying and praying is for losers — profit losers, that is. This market can move fast and too much patience can hurt you. Remember, it’s a trader’s market right now.
You’ll be more in control if you take profits along the way. I repeat — if things are going well for you … TAKE PROFITS.
If you do this successfully — even if your setup suddenly reverses on you — you may still be in a position to profit or break even.
Again, it’s a good idea to look for levels of support or resistance as incremental price targets. That should be part of your trade plan so you can strategically scale out.
Also, don’t forget to move your stop loss up or down to protect your profits as the trade hits your price targets.
#11 Winners Are Fashionably Late
FOMO is a beast…
With as many moves as we’re seeing, there’s no need to be impatient. Impatience leads to bad decisions. There will always be another trade. Don’t beat yourself up for missing one.
Being early can be dangerous in this market — in fact, it’s better to be 75 cents late than to be $2 early. Base hits lead to solid confidence and consistency.
Don’t focus on catching tops or bottoms. Wait for confirmation and focus on the setups that fit your criteria.
#12 Don’t Focus on What Got Away
Volatile market, bear market, bull market — doesn’t matter … Greed will destroy you in any market.
It’s the starting point for emotional trading. It’s a perspective killer … and guess what?
Perspective is a trader’s best friend. If you keep looking at what you could have made, it will eventually affect your decision making.
In times of high volatility, you have to be extra cautious. Protect your risk management mindset!
#13 Stick With What You Know
You need an edge.
There are winners and losers to every trade … and you’re hoping that something you’re doing can give you an edge to win over the other traders.
That said, if you have a setup that’s working, stay with it. You may have to refine and tweak as this crazy market changes. That’s OK. In this volatile market, you’re gonna see lots of new opportunities.
It’s only natural that you’re gonna want a piece of the action. So paper trade new setups or start small. And if you have a setup that’s consistent for you, focus on that.
#14 Know When to Walk Away
For my last tip, I wanna encourage you to take time to walk away from the screens.
The pandemic lockdown meant a large population of people started working remotely for the first time. And a lot are out of work. I think a lot of people are using this time to trade the market.
If that’s you, please, focus on your education. Don’t blow up your account because you don’t know what you’re doing.
And be sure to take regular breaks, exercise, eat right, and talk to your friends and family. Remember when I said perspective is a trader’s best friend? These things help with that.
Also, set a max loss for the day. Make sure to pick a number that won’t break your bank.
For example, if you set a daily max loss of $100 and lose $105 on a trade … take that as a cue to walk away and enjoy your day another way.
Setting personal boundaries like this will not only keep you safe … it’ll help you learn more effectively.
Volatile Market Bonus Tip!
I promised a bonus tip at the beginning of this post … so here it is.
I think every trader should check out the “Volatility Survival Guide” I made with Tim Sykes. A volatile market can be scary if you’ve never seen anything like it. So better prepare now for this one … and any volatility you may see down the line.
Because it can mean a lot of opportunities for well-trained, laser-focused traders. This a great no-cost resource. And you can get tips for how to use your scanners to find the best stocks to trade for your strategy.
The Volatile Market Wrap
Well, that’s it!
Those are my 14 tips for traders who want to trade smarter through this unique and spectacular trading environment.
Remember … even though the opportunities are there, you still have to build skills and trade smart.
Do the hard work — make mistakes and then learn from them. Don’t be lazy. If the stocks you watch don’t play out like you thought, find out why. Use the tips in this post to shorten your learning curve.
If you’re looking for a trading platform, check out StocksToTrade. It’s a platform built by traders for traders. It has a TON of tools and resources that will make even the most experienced traders happy.
And you gotta check out our brand-new Breaking News chat feature. Traders are in LOVE with it. See how two skilled stock market pros can help you find the news with the most potential to move stocks. Here’s where you can learn more and sign up TODAY.
How do you feel about trading in this highly volatile market? Leave a comment!