You know the feeling. It’s mid-August, or the week between Christmas and New Year’s. The market feels dead. The explosive morning moves are gone, replaced by a slow, sideways grind. This is the reality of low-volume trading.
For most retail traders, these “market doldrums” are a death sentence. They get chopped up by meaningless wiggles, bleed their accounts through a thousand tiny cuts, and give back weeks of hard-earned profits.
But for our team, it’s just a different environment that requires a different playbook.
Low-volume, low-volatility markets are dangerous, no doubt. But with the right mindset and a specific, disciplined strategy, you can not only survive these periods but also find consistent, small wins while everyone else is getting frustrated. This is our playbook for doing exactly that.
What Are Low-Volume & Low-Volatility Markets? (The “Chop Zone”)
Before we dive into strategy, let’s get on the same page.
- Low Volume: This simply means fewer shares are being traded than usual. The big institutional players—mutual funds, pension funds—are often on the sidelines. This is common during the summer months and around major holidays.
- Low Volatility: This is the effect of low volume. With fewer participants, there’s less conviction and energy to push the price in a clear direction. The result is a tight, choppy, or sideways market.
Think of it like a river. On a normal day, the current (volume) is strong, carrying boats (price) steadily in one direction. In a low-volume market, the river turns into a stagnant pond. The boats just drift around aimlessly, making it impossible to navigate.
This environment is dangerous for two key reasons:
- Wider Spreads & Slippage: With fewer buyers and sellers, the gap between the bid and ask price (the spread) often widens. This means your entry and exit costs are higher. Slippage—getting a worse price than you intended—is also more common.
- Sudden, Vicious Moves: A single large order can cause a sudden, sharp price spike or drop, often called a “whipsaw,” that stops you out before immediately reversing.
If you try to use your normal trend-following strategies here, you’ll get eaten alive. You need to adapt.
The 3 Cardinal Rules for Surviving the Chop
Before you even place a trade in these conditions, you must adopt a new mindset. These three rules are non-negotiable for our traders.
Rule 1: Shrink Everything (Size, Targets, Stops)
This is the most important adjustment. In a market with no energy, you can’t expect home-run trades. Everything needs to be scaled down.
- Position Size: Cut your normal size by at least 50%. This reduces your risk and the emotional impact of the inevitable frustrating trades. Our guide to Position Sizing for Beginners is a great place to start.
- Profit Targets: Don’t aim for a massive trend day. Look for small, consistent base hits. If your normal target is 3 points on the S&P, maybe now it’s 1 or 1.5 points.
- Stop Losses: Because moves are smaller, your stops should be tighter. The goal is to know you’re wrong immediately and get out with a tiny loss.
Rule 2: Patience is Your Paycheck
In a quiet market, your biggest enemy is boredom. It’s so tempting to force a trade just to do something. This is a fatal error.
You must accept that there might only be one or two high-quality setups all day. Your job is to wait patiently for those specific setups to come to you at the edges of a range. If they don’t appear, you don’t trade. It’s that simple. True trading discipline isn’t about being in the market; it’s about following your plan.
Rule 3: Walking Away is a Winning Trade
On some low-volume days, the best trade is no trade at all. If you can’t find a clear range or the price action is just too random, the most profitable decision you can make is to shut down your platform and protect your capital.
Preserving your mental and financial capital for a better trading day is a professional move. Don’t let your ego convince you that you have to trade every day.
Our 5-Step Scalping Strategy for Low-Volume Markets
Okay, you’ve adopted the right mindset. Now, here’s a simple, rules-based strategy our team uses to trade these tight ranges. This approach is a form of scalping, designed to take small bites out of the market.
Step 1: Identify the “Box” (A Clear Range)
First thing’s first: you need a predictable playing field. Look for a stock or ETF that is clearly trading between a horizontal support level (the floor) and a horizontal resistance level (the ceiling). The cleaner and more obvious this “box” is, the better. If you have to squint and guess where the levels are, move on.
Step 2: Wait for Price to Test the Edges
Do not trade in the middle of the range. That’s “no man’s land.” You must wait for the price to move to the clear support or resistance level you identified in Step 1. This requires patience (see Cardinal Rule #2).
Step 3: Look for a Rejection Candlestick Signal
When the price touches one of the edges, don’t just blindly enter. We need to see evidence that the level is holding. Look for a clear rejection signal, such as:
- A Pin Bar (or Hammer): A candle with a long wick sticking out of the range, showing that price tried to break out but was aggressively pushed back inside.
- An Engulfing Candle: A large candle that completely engulfs the prior candle, signaling a strong reversal away from the edge.
Step 4: Enter with a Tight Stop Outside the Range
Once you see the rejection candle close, you can enter the trade.
- If price rejected resistance (the ceiling), you enter a short position.
- If price rejected support (the floor), you enter a long position.
Your stop-loss must be placed just outside the range, on the other side of your rejection candle’s wick. If the price goes back there, your idea was wrong, and you should be out with a minimal loss.
Step 5: Take Profits at the Midpoint or Opposite Side
Because we’re in a low-volatility environment, we take profits quickly and mechanically. You have two primary options:
- Aggressive Target: Take profit at the midpoint of the range.
- Standard Target: Take profit just before the opposite side of the range.
Don’t get greedy and expect a huge breakout. The entire premise of this strategy is that the market is stuck in a range-bound condition.
Real Trade Simulation: Scalping QQQ in the August Doldrums
Let’s make this real. Imagine it’s a quiet Tuesday in late August 2025. Volume is light, and the Nasdaq 100 ETF (QQQ) is going nowhere fast.
- Step 1: Identify the “Box”
- Our traders notice that for the past 90 minutes, QQQ has been stuck. We draw a resistance line at $445.50 and a support line at $444.50. The “box” is $1 wide.
- Step 2: Wait for the Test
- Around 1:30 PM ET, price slowly drifts up and touches the $445.50 resistance level. We are now on high alert, waiting for a signal.
- Step 3: Look for Rejection
- The 5-minute candle that touches $445.50 fails to break through. It closes back at $445.35, leaving a small wick poking above the resistance line. This is our rejection signal.
- Step 4: Enter with a Tight Stop
- We enter a short position at $445.30.
- Our stop-loss is placed at $445.65, just above the high of the rejection wick. Our total risk is $0.35 per share.
- Step 5: Take Profits
- Our target is the other side of the range. We place a take-profit limit order at $444.60, just above the support level.
- Over the next 30 minutes, the price slowly drifts back down and our target is hit.
- Result: A profit of $0.70 per share on a risk of $0.35—a clean 2:1 reward/risk trade.
This is the bread and butter of low-volume trading. It’s not glamorous, but it’s a professional, repeatable process.
Tools You’ll Need
While this strategy is simple, having the right tools makes a huge difference.
- Charting Platform: You need a high-quality charting package to draw your levels accurately. Our team relies heavily on TradingView for its clean charts and intuitive drawing tools.
- Stock Scanner: On a quiet day, 99% of stocks are untradable. A powerful scanner is your only hope of finding the 1% that might have a catalyst and unusual volume. The A.I. scanners from Trade-Ideas are purpose-built to find these outliers, making it an indispensable tool for our traders. For more on scanners, check out our Introduction to Stock Scanners.
The 3 Biggest Mistakes Traders Make in Quiet Markets
We see these same errors every summer and holiday season. Avoid them at all costs.
- Forcing Trades Out of Boredom: This is the #1 account killer. You sit there for two hours, see nothing, and your mind screams, “I need to make money!” You take a garbage setup and get an instant loss.
- Using Trend-Following Strategies: Trying to use moving average crossovers or breakout strategies when there is no volume or momentum is like trying to sail a boat with no wind. You’ll just sit there, or worse, go backward. You must match your strategy to the market condition.
- Ignoring Increased Costs: In low-volume markets, the bid-ask spread can widen significantly. If the spread on a stock is normally $0.02, it might be $0.10 in the summer. That’s a huge hidden cost that makes small wins almost impossible. Always be aware of the spread before you enter.
Frequently Asked Questions
How do you trade in a low-volume market?
You should focus on scalping well-defined ranges. Trade smaller position sizes, use tighter stops, and aim for smaller, more realistic profit targets while avoiding trend-following strategies.
Key Takeaway: Adaptability is key; shrink your expectations and trade only the cleanest A+ setups at the edges of a range.
What is a good strategy for low volatility?
The best strategies are range-bound or mean-reversion strategies. This involves identifying a clear support and resistance “box” and trading short at the top and long at the bottom, targeting the other side of the range.
Key Takeaway: Sell the rips and buy the dips within a clear, established channel.
Is it harder to trade in low volume?
Yes, it is generally harder because price action is less predictable, costs (spreads) are higher, and the risk of sudden, erratic moves (whipsaws) increases significantly.
Key Takeaway: Low-volume trading requires more patience and discipline than normal market conditions.
Why is low volume bad for day trading?
It’s considered bad because it leads to a lack of directional conviction, wider spreads, and higher slippage. This combination makes it difficult for traders to get clean entries and exits and erodes profitability.
Key Takeaway: Low volume removes the “fuel” (liquidity) that powers clean trends, leading to choppy and unreliable price action.
How do you avoid overtrading in a choppy market?
Implement strict rules, such as a maximum number of trades per day (e.g., three) or a “two strikes and you’re out” rule. If your first two well-executed trades are losers, you walk away for the day.
Key Takeaway: Pre-defining your daily limits before the market opens is the best defense against emotional, boredom-driven trading.
What time of day has the lowest volume?
The lowest volume period of the trading day is typically the midday session, roughly from 11:30 AM to 2:30 PM EST. This is often referred to as the “lunchtime lull” or “midday chop.”
Key Takeaway: Be extra cautious during the midday session, as this is when chop and fakeouts are most common.
Should you trade during summer?
You can, but you must adapt your strategy. Many professional traders take extended breaks or trade much less frequently during the summer months due to the predictably lower volume and volatility.
Key Takeaway: If you choose to trade in the summer, you must use a low-volume strategy and accept that opportunities will be limited.
What are the “summer doldrums” in trading?
This is a colloquial term for the period from roughly June to August when trading volume and volatility tend to decrease significantly as many institutional traders and market participants go on vacation.
Key Takeaway: The “summer doldrums” refers to the slow, choppy, and trendless market conditions typical of the summer months.
Can you make money in a sideways market?
Absolutely, but you must use a range-trading strategy. Profitability in a sideways market comes from repeatedly buying at support and selling at resistance, not from trying to catch a big trend.
Key Takeaway: Profit in sideways markets is made through small, consistent wins inside a defined range.
What indicators work best in low volatility?
Oscillators like the Stochastic or RSI can be effective for identifying overbought/oversold conditions at the edges of a range. However, relying on candlestick price action for confirmation is often more reliable.
Key Takeaway: Avoid trend-following indicators like moving averages and focus on oscillators that measure momentum within a range.
Conclusion: Your Next Steps
Trading in low-volume, low-volatility markets is a game of defense and precision. It’s not about hitting home runs; it’s about protecting your capital and methodically capturing small, high-probability wins when they present themselves.
Most traders fail in these conditions because they refuse to adapt. They use the same aggressive, trend-following approach they use on a high-volume day and get systematically dismantled.
Your next step is to embrace the change. Pull up a chart from last August. Identify the “boxes” and practice spotting the rejection signals. Record your findings in your trading journal and see if you can master this methodical, patient approach. It’s a skill that will not only help you survive the summer doldrums but will make you a more versatile and resilient trader year-round. For more information on navigating holidays, you can review official market closure schedules from sources like the CME Group.
