█ Mastering Volatile Markets Part 1: Why Reducing Position Size is Key
Trading is always challenging, but how do you navigate today's markets? That's a whole different level. Today, we'll move away from the usual "Trump's tariffs are horrendous" discussions. We'll instead focus on how experienced traders profit in the current volatile market.
Right now, we're seeing extreme volatility across many assets. It's not uncommon for markets to move 3% to 10% in a single day, and for indices like NAS100 (Nasdaq), intraday swings of 300 to 500 points can happen in just 5 to 30 minutes.
Volatile markets can shake even experienced traders — but they don’t have to. With 16 years of trading experience, we’ll show you exactly how to approach conditions like these with confidence and clarity.
█ Reducing position size is the key to surviving volatility:
The most critical adjustment in a volatile market is reducing position size.
Why? Because when the market moves faster and with bigger swings, your potential risk per trade automatically increases. The key is to keep your dollar risk the same — even when volatility is exploding.
⚪ Let's take a look at how position size changes when markets change:
2 Weeks Ago — Stable Market:
⚪ The Benefit:
With a smaller position, you can still earn the same profit because the price is moving much more. At the same time, your risk stays controlled, even in these wild markets.
This is exactly how professional traders survive and thrive in volatile conditions — by adjusting to what the market is giving them.
⚪ What Happens If You Don't Reduce Size?
Let's say you keep the same position size as in stable markets, but now the market moves 300-500 points against you instead of 50-100. Here's how it plays out (example):
In Stable Markets (NAS100 average move: 50-100 points):
Without reducing position size, your risk increases dramatically as the market moves wildly. As a result, your losses will skyrocket when the market moves against you.
█ Summary:
This is rule number one when navigating wild markets like the ones we have today.
█ What's Coming Next in the Series:
Stay tuned for the next part — and remember, adapting to volatility isn't just about managing risk, it's about mastering the market!
-----------------
Disclaimer
The content provided in my scripts, indicators, ideas, algorithms, and systems is for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or a solicitation to buy or sell any financial instruments. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
Trading is always challenging, but how do you navigate today's markets? That's a whole different level. Today, we'll move away from the usual "Trump's tariffs are horrendous" discussions. We'll instead focus on how experienced traders profit in the current volatile market.
Right now, we're seeing extreme volatility across many assets. It's not uncommon for markets to move 3% to 10% in a single day, and for indices like NAS100 (Nasdaq), intraday swings of 300 to 500 points can happen in just 5 to 30 minutes.
This can seem like bad news, but as Warren Buffet said in 2008, "In short, bad news is an investor's best friend."
Volatile markets can shake even experienced traders — but they don’t have to. With 16 years of trading experience, we’ll show you exactly how to approach conditions like these with confidence and clarity.
█ Reducing position size is the key to surviving volatility:
The most critical adjustment in a volatile market is reducing position size.
Why? Because when the market moves faster and with bigger swings, your potential risk per trade automatically increases. The key is to keep your dollar risk the same — even when volatility is exploding.
⚪ Let's take a look at how position size changes when markets change:
2 Weeks Ago — Stable Market:
- NAS100 average move per trade = 50 to 100 points
- Risk per trade = 100 points = $500 risk (for example)
- Position Size = 5 contracts
Today — Volatile Market:
- NAS100 average move per trade = 300 to 500 points
- To maintain the same $500 risk per trade → Position Size = 1 contract
⚪ The Benefit:
With a smaller position, you can still earn the same profit because the price is moving much more. At the same time, your risk stays controlled, even in these wild markets.
This is exactly how professional traders survive and thrive in volatile conditions — by adjusting to what the market is giving them.
⚪ What Happens If You Don't Reduce Size?
Let's say you keep the same position size as in stable markets, but now the market moves 300-500 points against you instead of 50-100. Here's how it plays out (example):
In Stable Markets (NAS100 average move: 50-100 points):
- Position Size: 5 contracts
- Risk per contract: $10 per point
- Risk per trade: 100 points x $10 x 5 contracts = $5,000 risk per trade
In Volatile Markets (NAS100 average move: 300-500 points):
- Position Size: 5 contracts (unchanged)
- Risk per contract: $10 per point
- Risk per trade: 500 points x $10 x 5 contracts = $25,000 risk per trade
Without reducing position size, your risk increases dramatically as the market moves wildly. As a result, your losses will skyrocket when the market moves against you.
█ Summary:
- Huge volatility = Smaller position size
- Same risk = Same profit potential
- Trade smarter, not bigger
This is rule number one when navigating wild markets like the ones we have today.
█ What's Coming Next in the Series:
- Part 2: Liquidity Is the Silent Killer
- Part 3: Patience Over FOMO
- Part 4: Trend Is Your Best Friend
Stay tuned for the next part — and remember, adapting to volatility isn't just about managing risk, it's about mastering the market!
-----------------
Disclaimer
The content provided in my scripts, indicators, ideas, algorithms, and systems is for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or a solicitation to buy or sell any financial instruments. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
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Earn $15
tradingview.com/gopro/?share_your_love=Zeiierman
SMC Trading
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Join Our Free Discord: discord.gg/zeiiermantrading
Access my indicators at: linktr.ee/zeiierman_trading
Earn $15
tradingview.com/gopro/?share_your_love=Zeiierman
SMC Trading
linktr.ee/zeiierman_trading
Access my indicators at: linktr.ee/zeiierman_trading
Earn $15
tradingview.com/gopro/?share_your_love=Zeiierman
SMC Trading
linktr.ee/zeiierman_trading
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.