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Trading during volatile markets

It's natural to feel anxious about your investments when the markets are volatile. See how you can weather the market swings.


  • Trading volumes are high during volatile markets.
  • Volatile markets can delay executions of trades.
  • Don't let emotions override the decisions you made for your long-term financial plans.

What to expect

Volatile markets are extreme and unpredictable. They're characterized by:

  • High trading volumes.
  • The inability of market makers and specialists to quickly match buy and sell orders.
  • The imbalance of trade orders in one direction.

Under these conditions, stock prices can change quickly and dramatically. Real-time quotes can lag behind actual market movements.

Trading tips

When you're placing trades in volatile markets, keep these points in mind:

Orders may be delayed

Your order may execute at a price significantly different from the quotes displayed when you entered your order.

Set prices to reduce risk

Placing a limit order allows you to set an upper or lower limit on the amount you're willing to pay or accept for a stock. There's no guarantee your order will execute.

Watch for systems slowdowns

Because of heavy trading volume in a particular security or the market overall, you may not be able to place an order electronically or you may have difficulty reaching an investment professional by phone.

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Limit order

An order to buy or sell a security at a specified price (limit price) or better. The execution is not guaranteed.

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Asset allocation

The way your account is divided among different asset classes, including stock, bond, and short-term or "cash" investments. Also known as "asset mix."

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The sum total of your investments managed toward a specific goal.

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An investment that represents part ownership in a corporation. Each share of stock is a proportional stake in the corporation's assets and profits.

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A loan made to a corporation or government in exchange for regular interest payments. The bond issuer agrees to pay back the loan by a specific date. Bonds can be traded on the secondary market.

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Cash investment

Very short-term investments—such as money market instruments, CDs (certificates of deposit), and Treasury bills—that mature in less than one year. Also known as cash reserves.

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The trading of a universe of investments, based on factors like supply and demand. For example, the "stock market" refers to the trading of stocks.

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Stocks, bonds, money market instruments, and other investment vehicles.