Navigating Volatility: A Guide to Profitable Stock Market Trading


All markets and investors experience market volatility. The scale and intensity may differ, but it comes with the territory. They are primarily caused by political unrest, economic downturns like recessions, natural disasters, a global pandemic, etc.

In this blog, we will discuss how to best navigate market volatility as an investor and the steps you can take to profit from these price fluctuations during stock market trading. Read on!

Share Trading

Defining Market Volatility

Market volatility refers to a given market’s price fluctuations. Prices will either go up or down — The bigger and more frequent the price fluctuations, the more volatile the market.

Embracing a Volatile Market

Market volatility is inevitable and investors should accept it as par for the course when stock market trading. Besides, volatility isn’t always a bad thing. Price swings allow you to sell for higher-than-average profits and buy stocks at a discount.

If you are new to investing and want to prepare for market volatility, you must:

  • Know your risk tolerance.
  • Diversify your portfolio.
  • Look into long-term investments.
  • Re-assess your portfolio regularly.

Trading Styles in Volatile Markets

  • Scalping: You hold trades for a few seconds to a few minutes to profit from small price fluctuations. Scalping can be stressful/draining as it requires you to hold multiple positions and constantly monitor markets.
  • Day Trading: You buy and sell stocks during the day and close your positions at the end of the market day. It requires a high degree of self-discipline and expertise and can be too risky/stressful for novice traders.
  • Swing Trading: You buy and hold stocks for a few days to months. Traders buy when prices are low and sell when high to profit from short to medium-term price movements. It requires good fundamental and technical analysis skills to identify opportunities, patterns and trends.
  • Position Trading: You buy and hold stocks for several months to decades. It is a long-term trading strategy that is less active than the other three. It may also limit your ability to profit from short-term price increases.

Volatility Trading Strategies

  • Be aware of expected market volatility. While nothing can guarantee a price increase or decrease, using resources like the India VIX volatility index can be helpful. It displays the expected/potential market volatility over the next 30 days.

The value usually lies between 15 – 35. Values below 20 mean low volatility/market stability, and higher values mean a higher risk of potential volatility.

  • Experienced, well-funded traders with a solid understanding of market trends can use short-term trading strategies like scalping or day trading to profit from short-term volatility.
  • If you don’t want to deal with the stress of active trading, options trading is viable. You can buy/sell stocks at a chosen price. If the stock price increases, you can sell for a profit, but if the price plummets, you can let your option expire.
  • You can also opt to forgo volatility altogether and go for position trading or invest in index funds if you are risk-averse. They let you take advantage of compounding and reduce transaction costs that come with frequent trades.

Timing and Patience

Any type of active trading strategy requires patience, strong risk management, self-discipline and good fundamental and technical analysis skills. These fundamentals will help prepare you for unstable market conditions and help avoid emotional trading decisions.

Timing is also another critical factor. Actively monitoring markets and checking historical data to identify trends will help you find opportunities to profit from price fluctuations.


Market volatility is a normal part of stock trading and investing. The takeaway here is not to panic when faced with uncertainty and to have a good trading strategy. If you are new, you can find some of the best trading platform in India for beginners online to help you get started.