Step by step
How to read it
- 1Quiet: small candles, small moves.
- 2Wild: big candles, fast moves both ways.
- 3Wider moves need a wider stop — so a smaller position for the same money at risk.
Watch out
Common mistake
Keeping the same position size when the market turns wild. The same size now risks far more.
Hypothetical numbers
Worked example
- Risk 100 on each trade.
- Quiet market: stop 20 pips → 0.5 lot.
- Wild market: stop 60 pips → about 0.17 lot.
In one line
Definition
How far and how fast price moves. Higher volatility needs a smaller position for the same risk.
Check yourself
Check yourself
Volatility doubles and you keep the same money at risk. The position should be…