Volatility in Trading: Iran, Oil, and the Middle East
(Dan Goldberg, Head of Risk)
We find ourselves once again looking at a period of high volatility. Last time I discussed this, we were referencing the moves we had been seeing in Silver and Gold. Now we have a Middle Eastern conflict, with a yet to be determined length, providing quick moves, volatility, and opportunity.
The question is handling this opportunity.
Volatility as risk amplification (not just faster opportunity)
Excess volatility is not only opportunity — it is risk amplification. When price expands beyond normal ranges, mistakes become more expensive. Prices skip past you, giving you worse fills. Freezing can cause major differences between planned exits and actual exits. Tight stops can get triggered instantly, levels are less likely to work with precision, and on and on. What worked in stable conditions often stops working, not because the idea is wrong, but because execution assumptions are no longer valid. Treating high volatility as “more of the same, just faster” is a common and costly error.
The correct response: adapt your parameters, not your ego
The correct response is not bravado but adaptation.
In my opinion, position sizing should contract first; reduced size buys cognitive clarity and protects capital while conditions stabilize. Stops will probably need to widen, but only if expectancy justifies it — otherwise the trade should be passed. You need to think in terms of areas, in my opinion, not a specific price point that has to hold exactly, allowing stops to be at clear-cut points through the level. In addition to stops widening, you need to raise your trade expectations.
A real example: why normal targets stop making sense
Oil. On the 9th March 2026, we saw a major spike in Crude Oil. Our opening price was around $98.00, and we spiked to a high of just shy of $120.00 a barrel before dropping to a low of $81.00 and finishing the day relatively unchanged! ATR on oil is around $7 per day. This move was around 6 times the ATR, and it was rapid. Normal rules cannot apply. You can’t be expected to run standard strategies that run off of normal variance under these exacerbated conditions. Stops that you allow for under normal conditions will just get whipped out in this type of environment.
Trade frequency should fall as volatility rises. Fewer trades, higher standards, clearer structure.
Volatility does not reward activity; it rewards selectivity.
Regime filter: which edges survive expansion?
Experienced traders treat volatility as a regime filter, not a trigger. Certain edges thrive in expansion, others fail outright. Mean-reversion strategies degrade when ranges stretch, and order flow becomes one-sided; momentum strategies require clearer structure and confirmation to avoid false continuation. The goal is not to force participation, but to deploy the right tool at the right time.
The psychological trap: chasing the thrill
At a psychological level, excess volatility exposes weaknesses in discipline. The urge to “make it back” or capitalize on fast moves leads to rushed decisions. And sometimes traders will just participate because it looks exciting. A gambling instinct comes out full front and centre. It’s hard. That’s why fruit machines still exist. Everyone knows the odds of winning are low, unless you have spent time analyzing the sequence of flashing light movement. But for the average passer-by, they see the lights, it looks exciting, and the hope of winning and the rush it will provide if they do win overrides the logic that tells them they won’t win. So they play.
Doing that in trading will cost you more than a pound! Yet, so often we see the movement, the flashing of numbers, and we instantly seek the thrill of making money. It seems like a must to join the fun.
The professional approach: wait for alignment, then execute
This is a poor way to trade. Running with our fruit machine analogy a bit longer. That “professional” player will wait until the lights line up, know the sequence he is looking for, and then “play the machine”. He is no longer just hoping. He has seen things line up for him and knows the machine is ready to pay out. Sounds similar?
A professional will do the same. Avoid chasing the thrill. Wait for things to line up and then execute.
Process checklist
- Reduce size
- Widen stop
- Widen expectation
- Be selective
- Shift focus from outcomes to process: execution quality, adherence to risk limits, and emotional neutrality.
When you’ve built the base, then you can press.
Dan’s Weekly Wisdom:
“The market moves faster in volatility, but your decisions shouldn’t.”