Volatility is down. No big news there. What does that mean for traders?
Are you adjusting? What does that mean for certain trades? What does that mean for our expectations? How do we compensate? Here’s a list of tips to get through the slower times, they could be here longer than we expect.
Trade times that are volatile. Don’t miss any of the volatile times: FOMC, NFP, figures.
Trade products that are “in play.” Have a look at what is moving and see what is having big days, research it, analyse it, sim it, get the stats, then go live.
Get innovating. It’s tough out there, but when it gets tough, the tough get going. Don’t just sit there smashing around at the same old stuff and getting the same old results. Change it up.
Increase size. When stuff is less volatile, increase your size. Generally speaking when vol goes down, size in order books goes up, so take advantage of the cover and get in there large.
Don’t take big hits. Without the vol out there, its hard to make it back. Tighten up your downside. Make sure it reflects your last 20 trading days’ performance.
Change your expectations. Without the vol, big days are harder to come by. Be satisfied with good trading on the size that you trade. Trades won’t run as far or as fast. Big winners will be harder to come by. Be genuinely satisfied with solid performance even if the number isn’t where it was 6 months ago.
Be patient. Hunker down. Vol always comes back. Somebody always does something stupid. Greece is out there. French and German elections are out there. 2004, 05 and 06 were all low vol years. We simply earned less and that was that. But it came back big during the crisis.
So stay alive, be patient, trade the busy times and products, don’t do something stupid that puts your career at risk, adjust downside and expectations, and grind it out. This is a marathon not a sprint, so prepare for the long game.