Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Weekend Thoughts on Current Market Scenario

1 min read

A lazy weekend morning and everything around you is slow and still!

Are you lost in your world of thoughts about the market?  Your open positions, economic concerns are flashing through your mind very frequently. You might be thinking whether the market bottomed out, where  the next support/resistance is, which stock one can pick up from these oversold markets, which stock can bring quick returns, where  the best trading opportunity is, where the market could go next and  arrays of thoughts might be running through your mind right now.

If yes, then possibly, you are a short-term trader/investor!

Whether we are in a bull/bear market I don’t know. But something in the landscape of market dynamics had changed for sure. It is not the same old slow uptrending bull market. We are no more facing muted volatility. 10-day ATR in Nifty expanded to 200+ levels and in Bank Nifty 580+ points which eventually means there is no slow tide of waves in the markets. If you are new this realm or never seen one before one has to learn to surf through the tsunami of fast and quick intraday moves.

Nifty Daily ATR

In an extended low volatile period “Buyers keeps buying” and they come to a belief that the equities they own are safer than they actually are. What we felt in the last two months is a “financial earthquake”. High volatile zone often comes with Volatility clustering. i.e “large changes tend to be followed by large changes… and small changes tend to be followed by small changes”. In simple terms when a market suffers a volatile shock, more volatility should be expected. This phenomenon has been referred to as the persistence of volatility shocks, which gives rise to the concept of volatility clustering.

The question here is are you prepared for such volatile shocks in terms of risk? One has to think in those terms because making money or losing more are even faster now. If you never experienced such high volatile conditions in the past then possibly it is the right time to think about reducing your positions in the market and play lightweight. Or you might be a risky trader if you are driven mostly by adrenaline-pumping impulsive trade decisions rather than an objective rational play!

Respect risk if you want to survive this sort of volatility especially those who never cared about market survival during those low volatile zones. It is not an easy task to control risk because most of us play here only to maximize our gains.  Every market thought us a different lesson. It is not going to end anytime soon. Keep learning!

 

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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