[es] How to Trade in High Volatility Market?

[xinxinzaizai 10]

Hi,dear all,

 

I am a new trader in stock index futures. The volatility and uncertainty of price action of the index futures confused me in trend identification & position holding.

 

Can anyone let me know how to bear a high volatility situation and hold the positions?

[Guest epic research]

It might be difficult for the beginners but for the experienced one trading in high volatile market is not a big deal.

[xinxinzaizai 10]

Thank you, and could you share more on how experienced traders deal with high volatility markets?

[BlueHorseshoe 10]

Hi,dear all,

 

I am a new trader in stock index futures. The volatility and uncertainty of price action of the index futures confused me in trend identification & position holding.

 

Can anyone let me know how to bear a high volatility situation and hold the positions?

 

Hello,

 

Position-sizing is probably the answer.

 

If you're daytrading, then as the post above points out, volatility is your friend. You get more movement in the contract (ie possibility of profit) for exactly the same fixed costs (spread, commission). As a daytrader these costs are your main enemies, and volatility helps you to minimize them. Volatility takes you closer to the kind of movements that longer term swing traders look for, but within a much shorter time period.

 

In terms of "how to bear a high volatility situation and hold the position" - you need to be able to cut the position down (if it's causing you problems). This means taking some contracts off.

 

Hope that helps.

 

BlueHorseshoe

[86834 10]

You need to have a plan laid out before hand which states how you're doing to deal with the volatility. The problem for new guys is that volatility gets them emotional, and that's when you will have poor judgement in the heat of the situation.

 

If you plan for volatility before the day starts and lay out a process of how you will deal with it then you'll be ok