Volatility is what makes trading possible. Without volatility we traders could not make money trading. However, much like a laxative, too much volatility can cause problems. As a short term trader, we love volatility when it moves the market our way, and hate it when it moves the market against us. Adjusting our trading to the current market volatility is essential. Because volatility is a two edged sword – it can reward us – or it had hurt us. Both can be considerable depending on how we handle it. Generally, we handle volatility by heightening our attention to the market we are trading. Being prepared to enter – or exit – at the right time becomes more critical the more volatility there exist in a market. One additional thing we have recently changed is our computer workspace configuration. Because so many markets are currently showing high volatility at times, we routinely use three intra-day charts – each of a different time frame. Our new workspace is shown in the figure below.

 

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