Over the past few weeks, the Russia-Ukraine headlines have been causing a constant whip-saw in the markets. With so much uncertainty, volatility has caused nightmares for many traders.
Ranges, volume, and premiums have increased drastically. For prepared traders, volatility means opportunity. We love to see expanded ranges and increased liquidity across the board to capitalize on.
Obviously, during volatile market conditions, you have to be careful and remain vigilant with your risk management parameters, but you also have to press the gas pedal a little and capitalize on the increased opportunity.
Today, we are going to cover some of the top ways you can capitalize on the increasing market volatility as a result of the unfortunate Russia-Ukraine conflict:
Play Less Size, Look For Bigger Moves
You don’t need to take huge position sizes to make great returns in this market day trading.
With increased volatility, you need to be keeping wide stops. You can use less size, lengthen your targets on your longs or shorts, and crush it. Taking smaller-sized positions as well will help keep your emotions lower, which will help you make clearer decisions. When volatility increases and ranges are expanded, you will get much more follow-through on your positions, so make sure to be patient and let the setups fully play themselves out.
Be sure to take your profits when you have them. Don’t overstay and get greedy in this volatility. Otherwise, this will happen:
Drill Down Into Hot Sectors
Any time you have increased market volatility, it is usually a result of some geopolitical or macroeconomic event. In this case, it is the Russia-Ukraine war. That means there will be certain sectors that get extremely hot and can give you some great opportunities if you just narrow your focus to those sectors. The trend is your friend.
Cybersecurity, commodity, and oil stocks in particular are sectors you need to keep on your radar throughout this crisis. They will have increased ranges, much more volume, and movement almost every day to capitalize on just due to their industries playing key roles in the conflict.
This video lesson will show you how to run scans to find the strongest sectors, and the best stocks to trade in these sectors:
Think Long Term And Build Your Portfolio
Whenever we see increased volatility and such steep drops in the overall market, a lot of people will panic. Smart traders and investors though will look through the fear and see what is performing well during these times, and investigate why. Gold for example has performed well during this conflict so far, and if you had none in your portfolio as a hedge before, now it will make you more inclined to add it.
Volatile times shouldn’t make you panic, they should make you think and sharpen your skills. There is so much more opportunity out there in the market now than there was just a few weeks ago due to the increased volatility.
Learn to identify relative strength in the markets, what stocks are the best vehicles to capitalize, and ignore the rest. Don’t try to trade everything, and also don’t expect the same strategies that worked a month ago to work today. Adjust your mindset and skillset to the current conditions. Be nimble, and manage your risk aggressively.
Our member Maz really narrowed his focus on hot sector plays recently and found great success in our community:
If you want to learn more about how we can teach you to navigate market volatility, make sure to sign up for our upcoming Live Trading Boot Camp!
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