I wanted to provide you some ideas today on withstanding and thriving in the whipsaw volatile market we find ourselves in currently. These are the kinds of thoughts that I have to keep in mind for myself as a long-time professional trader, and times likes these are when we most need to keep our heads and minds cool and rational.

Shorten Up Your Holding Periods in Volatile Markets

The technical indicators and charts we use for options trading are based on different time frames -- all the way from the 1-minute intra-day tick charts to long-term monthly charts covering a decade or more. When he enter hugely volatile times like we are currently in, it is advisable, in my view, to "tighten up" both the holding periods of your trades and also look to shorten your trading indicators.

Being flexible to current market conditions while still maintaining your underlying systems/indicators/methods can be vital to long-term trading success. So, for example, if you are generally comfortable and successful using daily charts with Acceleration Bands and Percent R re-tests, and you begin to find it not working in the current market, you may want to look at shortening down to 60-minute intraday charts. And with that, you would look at shorter holding periods for your trades, too.

Keep your Mental Game Clear

If you have a bad run of trading, which can happen during whipsaw markets like this, don't let your mental stress ruin your "game." Take a step back, scale down the amount of contracts you trade, and try to view each new trade as a new independent event. It's similar to the top defensive backs in the NFL. They may get burned badly for a touchdown, but the best players instantly forget the bad play and are immediately back "in the moment" on the next play. They have confidence in themselves and their techniques/ability. Those that let the bad plays and the opposing team get into their head; often find themselves riding the bench.

If your mental state is not properly aligned due to stress, whether market, financial, personal, or from outside sources, back away from the market for a bit. Get some fresh air, listen to music, play with the kids, and then come back to your charts and indicators with a fresh perspective. A clear mind is a more rational mind.

Sometimes the Best Trade is No Trade

Do not get caught in the mindset of "I just missed the best opportunity" There will always be another profit opportunity, especially with the short-term focus and flexibility of options trading. And the flipside of "missing" a good opportunity is also "missing" a lot of huge losing trades. Remember, we can build wealth and profits in trading any market. So don't force trades. Don't chase prices that have run away from you. Don't trade just to trade.

Study and Know Your History

Knowing your history will allow you to step back and figure out where we stand in the big picture. Certainly some very unusual things are going on in the current environment, but the history of markets and trading tends to repeat itself. But knowing market history can help you see the Big Picture during unusual times.

For example, during the Internet Bubble that culminated in 2001, I clearly saw that we were in the midst of a historic upside parabolic bubble. Consequently, I took part in the upside, but was taking profits all the way up, knowing it would end someday (and end badly). I was not caught holding the bag with a full portfolio of unrealized capital gains on worthless dot com names when it all came crashing down. Similarly, during the recent Real Estate Bubble, I clearly saw that prices in certain areas of the country were expanding at unsustainable rates. If you lived in a house that went from $300,000 value to $1 million in about 5 years, an alarm bell should have been ringing in your head telling you it was time to take some equity/profits out of the house, and to lessen your debt and risk, not increase it.

As to the current market environment, I would advise researching historical events like the 1907 crash, the 1929 crash, the 1989 Nikkei peak, to get some perspective on where we stand and may be heading. Though these are not necessarily positive "bullish" historical events, I keep stressing that through shorter-term options trading there will be plenty of profitable and attractive risk/reward opportunities in the coming days, weeks, months, and years.

Price Headley is the founder and chief analyst of BigTrends.com.