Wow, the stock market has been all over the place lately, very choppy and very volatile.
I talked about it on Wednesday during my SteadyTrade Podcast with Matt McCall.
If you haven’t already, tune into our free weekly podcast, where Matt and I take viewer questions and discuss current events and topics affecting the markets and trading.
Here’s a Financial Times headline and article excerpt from last Friday, September 6th:
And take a look at the S&P 500 and the NASDAQ over the last two weeks:
SPY 1-Month, 1-Hour Candles Chart; SteadyTrade
QQQ 1-Month, 1-Hour Candles Chart; SteadyTrade
Not pretty, I know. It’s not exactly the upwards-moving diagonal line that we like to see.
And a mix of factors is fueling this volatility…
Table of Contents
Uncertainty, Uncertainty, Uncertainty…
Most of it comes down to not having a clear picture of the future.
First, we’ve got economic uncertainty. The Fed is expected to announce a rate cut next week but investors are concerned that this may change after higher-than expected CPI numbers were released yesterday.
Then, there’s the geopolitical tension. Conflicts in the Middle East and Ukraine also create uncertainty.
Combine all of the above and you get a market like we have right now.
When traders and investors can’t predict what’s going to happen next, you get a lot of fear-based selling and wild swings in prices.
Should You Be Concerned About Volatility?
Volatility can be your best friend, if you know how to handle it. Instead of fearing it, you’ve got to embrace it.
When markets get wild, the instinct is to panic. It’s human nature.
Volatility feels like a sudden storm, and most people get nervous because it’s unpredictable.
But it’s only scary because it’s unknown. Once you learn to understand it, volatility becomes something you can work with, not against.
If you approach volatility with the right mindset, it opens doors to new opportunities. The swings create entry and exit points that you can capitalize on if you’ve got a solid trading plan.
And that’s why I’m always preaching unemotional trading and sticking to your strategy.
Make Volatility Work for You
Here’s a twist for you: Volatility is exactly what gives you the potential to profit. Huge price swings create big opportunities. Let’s look at a few reasons why volatility can actually benefit you:
Volatility Equals Opportunity
The more prices swing, the more opportunities there are to profit. Bigger price ranges mean more chances to enter and exit positions.
Sure, the risks are higher, but so are the rewards. By the way, if you think trading is risk-free, you shouldn’t be doing it.
Every trade has risk, but in volatile markets, the potential for gains increases dramatically.
By the way, our Oracle system thrives on volatility and big gains.
If you’re not familiar with Oracle, you should be!
Our proprietary tool scans the entire market every morning, applies its algorithm to the price patterns it sees, and then generates a list of twenty stocks with green “buy” signals or red “short” signals. Each stock on the list also comes with Oracle’s suggested entry price.
Look what it handed to us on Wednesday for CN Energy Group (NASDAQ: CNEY):
CNEY Oracle Chart
Oracle takes a lot of the “volatility-phobia” out of trading…
Learn more about the tool I couldn’t trade without!
Volatility Helps You Understand Risk
When markets are volatile, you start thinking more carefully about the risks you’re taking. Is a stock too volatile, or maybe not volatile enough?
The more you trade during volatile times, the better you get at assessing risk and making smarter decisions.
When you’re only trading with money you can afford to lose, you’ll feel more confident, even in choppy waters.
And if you’re new to trading, you should always paper trade your strategies before risking your own capital.
Volatility Sharpens Your Skills
Trading volatile stocks forces you to up your game. You set tighter stop losses, you’re more deliberate about your entries and exits, and you gain a better understanding of your own risk tolerance.
In other words, volatility makes you a sharper trader. It prepares you for all market conditions, even when things are calm.
By the way, if you don’t have a robust platform, trading in a volatile market can work against you.
You need a system that allows you to paper trade, set alerts, apply technical indicators, screen for stocks, and more.
My top pick is StockstoTrade.
It has the indicators, dynamic charts, and stock screening capabilities that traders like me look for in a platform. And best of all, it’s the optimal tool for trading volatile stocks.
Grab your 14-day StocksToTrade trial today — it’s only $7!
Volatility Is Your Friend
Without volatility, stocks would flatline. No movement means no risk, of course, but it also means no reward.
With the right plan in place, volatility becomes a thing of beauty. You get the opportunity to buy stocks at a bargain, ride the swings, and potentially sell for a big gain.
It’s all about having the right attitude, the right tools, building your experience, and sharpening your skills.
Have a great weekend, everyone. See you back here on Monday.
Tim Bohen
Lead Trainer, StocksToTrade
P.S.
If you’ve ever considered options trading, now might be the time to explore it further.
Options thrive on volatility…
My colleague and seasoned options trader, Jeff Zaniniri, has developed an AI-powered algorithm called GAMMA that exploits a market inefficiency, or glitch, within certain options contracts.
These glitches trigger alerts in his system, which Jeff shares with his GAMMA subscribers every Monday, Wednesday, and Friday.
Learn about the glitch that can make you a master options trader!