Minimizing Risk And MAXIMIZING Gains During Volatile Market Conditions

Is the recent high market volatility kind of stressing you out? Well, if so, you're not alone. And today we're going to talk about that and how to properly deal with it so that you. So that it doesn't wind up costing you a lot of money. I mean, it can be. The recent times can be really tough to deal with with all the volatility. And the thing is, in times like these are certain things that you need to keep in mind. And really one of the, I mean, risk management and protecting yourself is by far the most important thing. Because remember with trading, survival is the most important thing. It really is. Trading is game. And the main thing is make sure that you survive so you can stay in the game and survive. Preferably not just surviving where. Okay, yeah, you try to trade through a rough period and you wind up taking a 40 or 50% hit to your account. That's not what we want to do. You want to get through the challenging periods the best that you can. Right now. Here's some of the things that you need to keep in mind and this should be helpful as far as being able to deal with it mentally. Understand, you basically have two types of traders. You have discretionary traders and discretionary trading. True discretionary trading, where you're just jumping in to the markets no matter what's going on, and you're trading whatever's there and it doesn't matter what the conditions are, it doesn't matter if the markets are flat, trending, volatile and all over the place, whatever, it doesn't matter. A true discretionary trader is going to jump in and just trade whatever the markets present. And that requires a significant level of skill in a lot of ways. Most traders, and where I recommend most traders be, until you reach that high level of skill. And reaching that high level of skill does take some time, but being able to trade competently and consistently profitably, that's something that any person can get into trading and you can get there in a matter of months. And here's what I'm talking about though. You have two type of. Two types of traders. You have. The discretionary trader can trade anything. A methodical trader, though, is a trader that says, I'm going to look for specific market conditions like the markets are trending and I'm going to employ a specific strategy that I know works in those conditions. That's a methodical trader. Now the thing is about a methodical trader, what we're looking for, our edge comes from the fact that under normal circumstances, the markets are Going to behave certain ways. There is an order to the markets and every now and then we'll see something in the charts or hear it in the news, whatever, but it begins the. It marks the beginning of a response in the markets that we've seen over and over again. And so it's like if we can identify the beginning of that then, and we can get in on it, then we know what to expect because it's repeated itself so, so many times over, over time. That's how all great trading strategies are developed and built is because there was something going on in the markets, there was a certain response pattern in the markets, patterns that are recognizable. And because it's human nature and actually, thankfully you got so many computer programs now doing trading. Yeah, things happen and the response is. It becomes a predictable thing. Cool. That's what gives us our edge as a trader because those are our little wind, I like to call them windows of predictability, where it's like in that little window of time we can reasonably expect what to. I mean, we can reasonably anticipate what to expect with decent amount of accuracy and a good frequency of probability that it's going to play out enough that we know, yeah, 70% of the time this is going to play out a certain way. So I can take advantage of that. So you got a methodical trader that's working on that. And. But the thing is, to be a methodical trader, for example, a momentum strategy, it requires the markets are trending, not flying all over the place like when things are volatile, but the markets are actually trending, there's a trend and some momentum moving the price. That's what a moment momentum strategies can be based on. But it requires normal market conditions, not unusual conditions like what we have lately. Unusual conditions or actually it's just recognizing the conditions that are favorable for that strategy. If you're going to be a methodical trader, you have an edge and you can make money consistently and reliably because you're looking for certain market conditions and you have a strategy that works under those conditions. And you know how well it works if you're doing it right, you're tracking your metrics, you know what your winning percentage is, you know what your profit loss ratio is, you know much any kind of a drawdown to expect. You're going into it in a very knowing manner. But it requires that you have normal conditions. What we're experiencing lately, and especially with all the volatility, the best thing you can do if you don't have a strategy specifically for Volatile markets, best thing to do is wait it out, back your focus off, don't get caught up in the moment seeing all these big market moves. It's like, oh my God, there's, you know, there's so much money being made there. It's like, fine, let the true sharks and the highly skilled traders deal with this. I'm going to wait until I have normal conditions so that I can get in and out of the markets and make money on a reliable, predictable basis without taking a huge hit. These are really just dangerous times. Now, normally, and I just had this conversation the other night, a colleague of mine and with the, with the height of, with volatility, a lot of times, volatility, the VIX in particular is something that you can look at, you can say, all right, I've got a momentum strategy and the VIX is something you can look at. And if the VIX is really low, then you can say, wow, the markets just aren't moving enough for me for my strategy to work. That's where the term like choppy markets come from is when you know, the markets are kind of flat and a momentum strategy is not going to do well. So you can use the VIX to protect yourself from choppy markets and just say, yeah, if the VIX is below this, I'm not going to trade. Okay, cool. Again, under normal circumstances, the other thing, the way, the other way that you can use the VIX is on the high side. It's like, okay, with volatile markets, that's when the market's jumping all over the place. It's not necessarily trending, but it's, you got a lot of big moves, not trending markets, just a lot of movement. And so you can look at the VIX and say, wow, if the VIX is too high. Again, Tom, not conducive circumstances to a trend following strategy. So again, keep an eye on the vix. If it's too low, sit on the sidelines. If it's too high, probably ought to sit on sidelines because the main thing is you're better off to go the week and not place any trades. Rather than jump, try to jump in, try to make money chasing things and forcing it and why are losing money, Right? Again, we're playing the long game. We want to look at this on the month. Did I have a good month? Not that I have a good day today, Did I get in and make money today? No. Did I have a good week? Did I have a good month? Am I having a good year? And it kind of, that can help kind of settle you down and make it easier to wait out the periods when you really do need to just plain sit on your hands, go find something else to do. If you look at the markets and they're just too volatile, like I said, better to have a non week than a bad week. And so really that's what you want to do. Now there are other things that come into it. If even under normal conditions you find that you're struggling with things and you're not sure you know what's going on, maybe when it's like, yeah, I'd like to find out, yeah, what's tripping me up. Well, I just created an assessment which you can and it's fortunate specifically for traders that'll help you find out. It's like, yeah, what's going on with my trading? What's likely, the causes and what can I do about it? And that's exactly what this is. So this self assessment is about. And so if you want to check it out, swing by InsideOutTrading.com and there's a link in the description and so check that out, take the assessment. It will help you understand what's going on. You know what you need to work on, what you need to go fix. One of the big, one of the most costly things for traders is blind spots. If you got a blind spot, there's something you know that's not working in your trading and you just don't know what it is. Blind spot. When you can find out what that is now you can do something about it and you don't have to keep living with frustration. So many people come to me, been frustrated and dealing with the same crap for years. I mean five years, seven years, eight, ten years dealing with the same problems because it's in the blind spot. So swing by Inside Out Trading.com, take the assessment, figure out what your blind spots are and and then we can go from there. You'll really, you'll enjoy it, it'll be enlightening for you and it'll be useful. So also if you enjoyed this video, give me a like and a subscribe down below. Share it with your friends. If you got friends who trade and you like them and you want them to do well, share it with them. I mean if you want to keep beating them, fine, share with other friends. Anyway, again I hope this been helpful. Swing by Inside Hot Trading.com we'll talk to you soon. Cheers.