The Chinese have a blessing that some would say was also a curse that wishes, "May you live in interesting times".

For traders like you and me, the previous months would have to count as interesting times.

I would say that last month's $10 drop in crude was something I will tell my grandchildren about, but I think I will have some stories to come of market rallies and declines that are likely to make the 10% one-day move in oil seem like yesterday’s news.

I have seen the markets explode with volatility many times in my 37 years trading. The challenge when this happens is what to do when the market goes from quiet to bizarre.

Years ago when I was on the trading floor, I remember a day when the market exploded.

The markets had been quiet for many months and all at once on this day the market took off, catching everyone by surprise. It was an amazing day, not unlike several of the days this week.

Just after the close, I looked over at the nearly empty trading pit to see the biggest broker on the floor sitting on the top step of the trading pit with his head in his hands, his elbows on his knees repeatedly saying, “God must be punishing us”.

I have to admit that it was a bizarre day, but I am fairly certain that God was not then, nor is he now, punishing us.

The fact is that when volatility spikes upward, even experienced traders have trouble getting used to the new level of higher volatility.

The same thing works in reverse when traders have trouble getting used to lower volatility when volatility first decreases.

The good news is that, once the volatility increases, markets tend to stay at a high level of volatility for an extended period and, best of all, good traders get used to the higher volatility.

However, until you are adjusted to this new higher volatility I would do three things:

1. I would trade proportionally smaller than I did previously;
2. I would adjust my loss limit per trade to account for the greater noise in the market;
3. I would not lose more in a highly volatile day than I was willing to lose in a normal day; and, importantly
4. I would have a clear plan as to how I was going to exploit the market per trade and per day should my trading be rewarded. It is during these wild times that the market can run in your favor much further than you ever thought possible. You just need to know how to let a runner run and how to add to a winner.

Trading is about is about picking your battles and it is about figuring out a way to be rewarded.

You do not need to spend more money in a volatile day in losses than is absolutely necessary.

The smartest traders are the ones who gingerly trade these volatile markets until they have found ways to be rewarded for their efforts. The real money goes to those few traders who know how to exploit the benefit the market is willing to give them during these wild times.

You and I can be happy that we live in interesting times, if we make the adjustments in our trading necessary to take advantage of the opportunities the market has to offer.

Wishing you success in your trading.

Jeff coaches traders from around the world to achieve meaningful success in their trading through his Professional Trader Mentoring Program. You can read Jeff's trading blog at www.ProfessionalTraderMentoring.com.