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.

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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 .

  • Manvinder singh

    Raul ,
    EUR/AUD pair you told us to short for long term has yielded money. Are you still suggesting us to remain in the position.?
    BTW your this article is very good .
    manvinder

    • Raul Lopez

      Hello Manvinder… I’m glad you’ve been able to take advantage of that trade!

      Good luck!

  • Chad Hogan

    Hi Raul,

    You know what Raul, I’ve been thinking exactly the same thing lately. I’ve almost stopped placing breakout orders even though price isn’t around any important levels. False breakouts are way too common now… I’m going to start focusing on the short term ranges as you suggested.
    Thanks m8.

    • Raul Lopez

      Yep, I think that’s the way to go Mate!!! When it trades in a clear condition, just take advantage of those medium term swings…

      But when it ranges, trade from both sides of the range, even if its in a clear market condition…

      Let me know how it goes Chad!

  • Donald Schnell

    Excellent article Raul Lopez, on how to adapt to the markets. Your advice to look to the short term ranges and how to trade them is priceless. Your coaching course truly developed this skill for me. You teach how to trade in a way that is simple and successful. You throw out all the complicated formulas and indicators.

    • Raul Lopez

      Thanks Donald! I really appreciate your comments!