Market conditions have changed (and what to do about it)

Forex Chart

Hey traders! How is your trading going? Have you noticed something different with the markets?

It’s obvious that the market conditions change from time to time (we cant expect the markets to trade in the same way for ever), and it looks like in the last couple of months, the conditions have changed…

Is it good or bad for us?

It could be both…

If you keep trading in the same way, it will be bad for you… But if you adapt, then it could be very good for you.

As always, we cant expect the market to adapt to our system/strategy, that’s our job, we need to adapt to the market conditions.

This isn’t something new…

The market conditions changed from time to time. I don’t know if you have been trading long enough, but a few years ago, the market conditions were a little different…

To give you one example…

7 or 8 years ago, the market could move 100 or more in just a few seconds after an important announcement…

Back then, it made sense to trade based on those fundamental releases… I remember traders that only traded 2 or 3 years a month, and only for a few hours each time…

Because back then, them market conditions allowed us to do so…

If you try to do that today, you’ll get smashed, time after time. So that’s not a feasible strategy any more.

We had to adapt and trade differently…

And right now, the market is doing exactly the same thing… it is changing, and we need adapt to those changes.

Now, the million dollar question: In which way the market is changing?

I see the market in a permanent nervous state, most of the time it hesitates and stays trading in tight ranges.

So what can we do about it?

  • We need to pay attention to those short term ranges… and once we spot one of them try to trade them. We need to see at least two rejections from each extreme of the range
  • Trade only on the extremes of the range, look for short opportunities around the upper extreme of the range, and long opportunities around the lower extreme of the range
  • Make sure to go short only when you get downward pressure, and go long when you get upward pressure

This means that we need to focus more on the shorter time frames, it also means that we are going to take more trades (good news for traders that aren’t that patient).

Should we stop trying to take advantage from the medium term swings?

Not at all…

There are still opportunities to trade the medium term swings, most of them on currency pairs that move the most…

So I’m still looking for those trades, we just need to make sure the market is actually trading in a very clear condition, and to use a tight trade management technique.

Your turn

What do you think? Have you noticed this?

Do you intend to adapt or are you going to trade in the same way?

Let me know.

forex, market, trading


Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .