Market uncertainty is a period when an asset's price moves without a clear direction, and traders cannot confidently identify the prevailing trend. In trader slang, such a state is sometimes labeled with the crude expression WTF, emphasizing the complete confusion and contradictory nature of the signals. At such moments technical indicators give conflicting readings, and the news background does not allow for unambiguous conclusions.
The causes of such uncertainty are varied: low liquidity, the absence of significant news, the anticipation of important events, a struggle between buyers and sellers of roughly equal strength. The market in this case often trades within a narrow sideways range or makes sharp, poorly predictable swings in both directions.
How to act amid uncertainty
- Reduce position size and do not use high leverage.
- Wait for a clear trend to form instead of trading against the noise.
- Rely on risk management and pre-set exit levels.
Experienced market participants treat such phases as a natural part of the cycle: periods of chaos give way to the formation of a new sustained move, and hasty decisions during moments of uncertainty often lead to losses.
