CHAPTER 26
Market Regimes and Volatility
The same model does not work all the time, because the market is not the same every day. This chapter tells you what kind of day it is and how much to trust your model.
26.1The Four Regimes
| Regime | Signal | What to do |
|---|---|---|
Trending | HH/HL or LH/LL, shallow retraces | Continuation models, full size |
Ranging | Equal highs and lows, no BOS | Edge reversals, half size |
Compressing | Narrowing range, ATR falling | Wait; trade the break |
Expanding | Large candles, gaps, news | Reduce size or stand aside |
26.2Three Ways To Read The Regime
- Structure: look at the last three swings - HH/HL means trend, equal means range.
- ATR: below 70 percent of the 20-day ATR is compression, above 130 percent is expansion.
- Session: narrow in Asia, opening in London, biggest in New York - this repeats.
26.3ATR-Based Position Sizing
Instead of a fixed pip stop, let volatility set it: stop = 1.5 x ATR(14). Small stop in quiet markets, wide stop in wild ones - but the risk stays 0.5 percent.
| ATR (pips) | Stop (1.5x) | লট ($১০০০, ০.৫%) |
|---|---|---|
8 | 12 | 0.04 |
15 | 22 | 0.02 |
30 | 45 | 0.01 |
60 | 90 | 0.006 |
26.4Session Volatility
| Time (Dhaka) | Character | Your job |
|---|---|---|
00:00-04:00 | NY PM, medium | PM models or rest |
04:00-08:00 | Deadest | Sleep |
08:00-12:00 | Asia, narrow | Mark the range |
12:00-16:00 | London, large | Primary trading |
16:00-20:00 | NY open, largest | Primary trading |
20:00-24:00 | NY AM, large | Primary trading |
26.5The News Calendar Workflow
- Check the calendar each morning and write down every high-impact release.
- No new entries in the 30 minutes before a release.
- If already in: tighten the stop or close half.
- After the release wait for the first five-minute candle to close.
- Trade again only once spreads normalise and an MSS prints.
26.6Matching Models To The Regime
| Regime | Better model | Avoid |
|---|---|---|
Trending | Silver Bullet, OTE, OB+FVG | Counter-trend reversals |
Ranging | Turtle soup, range edge sweeps | Chasing breakouts |
Compressing | Breakout continuation | Scalping inside |
Expanding | Catching the first leg, small size | Late entries |
Educational material only · not financial advice.