Traders experience different trading environments in the market. A market environment may change according to certain events and factors happening inside or outside of the market. A certain market environment may also affect how traders operate. Identifying and knowing these different trading environments may also help you have a better grasp of what may likely be happening in the market and possibly make your trading decisions based on these trading environments as they occur.

High Volume, Low Volatility Environment

This type of trading environment is characterized by relatively small intraday market movements. The market may generally be filled by large bids and offers at each price levels and at relatively high volume.

High Volume, High Volatility Environment

In this type of trading environment, the market may show relatively large intraday movements. There might be small bids and offers shown at each price level and trading with relatively high volume.

Low Volume, Low/High Volatility Environment

This market environment may see little trading going on. This type of market environment may be characterized by trading in low volumes. What little trading there may be happening, they may usually take place either on a large price area or a small price area.