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Nick Goold

No indicator or strategy can be applied to any market and remain profitable forever without adjustments. As a result, many traders need to learn how to adjust their stop-loss and take profit orders to the current market. As a result, they find it challenging to generate profits regularly, and they feel stressed.

The key to long-term profitability is understanding why markets change and adapting your trading strategy to each market situation.

The two main factors that cause markets to change are volatility and market patterns.


Volatility measures how much the market will move within a given period. For example, one measure of intraday volatility is analyzing the market's 30-minute range (the difference between highs and lows) throughout the day. Comparing today's last 30-minute range to historical data can help forecast today's volatility.

Another volatility indicator is the Average True Range (ATR). The ATR indicator calculates a daily average of the past 14 days volatility. Plotted on a daily chart, ATR can help understand whether volatility is high or low. Understanding how the market's volatility on a given day will help you determine your target and stop levels. It can also help you find more effective strategies.

For example, a range strategy may be best when the market is quiet, while a trend strategy may better concentrate only on buying opportunities throughout the day. The key point here is to analyze volatility before making the trade.

When volatility increases

Targets and stops

If the price begins to move more than usual, it is time to widen your target and stop loss. Unnecessary losses can be avoided by widening stops when volatility increases. Of course, increasing your stop loss lowers your risk-reward ratio, so you should also increase your target by the same or greater amount.


When volatility increases, stop trading a range strategy until the market quiets down until you consider range trading. If volatility rises, a trend may develop. If the market moves in one direction, this is an opportunity to increase profits because you can set a larger risk reward. Look for opportunities to trade with trend-following strategies that take advantage of large movements.

Mental control

As price movements increase, the stress you feel from trading will also increase. Profit and loss fluctuations will also increase and may be unsettling. When volatility rises, it is essential to place stop orders and enter trades by reacting to market moves. There is a greater likelihood of a sharp rebound or selloff after a large market move. Increasing your trade frequency when the market volatility increases is tempting, but it produces poor results without preparation.

When volatility declines

Targets and stops

When the market volatility falls, it is time to narrow your targets and stops. In a quiet market with no news, it can be stressful when unrealized gains turn into losses, so keep targets small and take smaller profits than usual. Avoid the temptation to increase your stop loss in quiet markets.


Quiet markets reduce trading opportunities and make it difficult to take large profits with trending strategies. If there are no important economic indicators to be released and there is no market activity, switch from a trend to a range strategy.

Mental Control

When the market is quiet, there are fewer trading opportunities, and people can trade when there is no profitable opportunity. The key to avoiding unplanned trades is to remain patient and take breaks when the market is quiet. Quiet market conditions do not last forever. In most cases, the quieter it gets, the more energy the market stores up, and the bigger the future market moves.

Market Patterns

Profitable traders do not rely solely on indicators but look for market movement patterns. An example of a pattern is when the market falls in the New York trading session and rises in the Tokyo session. Analyzing how the market moves between different times of the day can put you ahead of other traders and make it easier to profit from the market consistently.

What to do when patterns stop working

No profitable market movement pattern lasts forever. When patterns stop working, many traders find that the strategy they believed in no longer works and need to switch plans. Sticking with the same method even when the market is changing can result in losses. Successful traders use many different patterns, and when one trading pattern doesn't work, they have multiple profitable ways to adapt to the current market's condition and use other strategies.

No matter what market pattern you choose to trade, it is helpful to consider long-term charts, market news, sentiment, and related markets. This analysis will help you understand when to change your trading strategy. Embracing and adapting to a changing market means you can join the small percentage of winning traders.