There is the prediction of market volatility this fall. Investors may flee this setting but the short term trader should be happy with a little market volatility with reasonable market volume. Trading uncertainty in the market can be profitable.

Many market investors believe that over the years the stock market will steadily rise and that a “buy and hold” strategy is the best bet as it eliminates the commissions involved in repeatedly buying and selling. Other investors look for “growth stocks” which will multiply in value as their product answers a consumer need, or desire in a steadily advancing economy.

In the wake of the worst recession since the 1930’s investors are not quite so sure any more. Thus, as we head into a fall, there is the promise of market volatility. Trading uncertainty in the market is a profitable thing. For the active trader market volatility along with decent market volume means profits.

Investors like to follow the herd, look for market consensus. There is little of that right now, thus market volatility. Market volume increases as the herd senses a new direction and market volume decreases as the herd regroups. The trader will take advantage of market volume to scalp profits by trading uncertainty in the market. Each announcement by the Federal Reserve either settles market volatility or exacerbates market volatility. Announcements of quarterly profits imply that the recovery is solid and then qualifications by company executives lead back to uncertainty and market volatility.

Although a lot of folks lost a lot of money when the market crashed many pulled their money in time. Thus there is money still on the sidelines waiting market opportunity. This is part of what causes the volatility. If everyone were still just sitting it out there would be little volume but there are investors who want to get back in and are still looking for signals. Trading uncertainty in the mind of the well to do investor still on the sidelines can mean looking for a promising stock and buying call options or it can mean waiting for the stock to move and scalping profits on the way up. Of course, if the market move is a false start, then you can scalp the market volatility and market uncertainty on the way down too as there will be, briefly, excellent market volume as the herd’s attention is drawn to a promising stock.

Market volatility may well extend beyond this coming fall unless the economy begins to show a sustained recovery. Market volatility will continue as investors put their money in the market and pull it out of stocks the next day. The uncertainty of the situation will continue to provide opportunity for the attentive trader who has developed and who executes a mature trading plan. Trading uncertainty in the market does not mean that you are uncertain. This has to do with the business of market psychology versus your psychology. There is always opportunity in market volatility and decent market volume.

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