Master The Art Of Market Compression

Market compression is a classic phase where price coils tightly, often signaling that expansion and a strong directional breakout are around the corner. Traders spot this using tools like Bollinger Band squeezes or contracting volume profiles, but the main trap is false breakouts—entering too early before the real move triggers.

For prop firm traders, compression phases require strict risk management. When volatility dries up, it is easy to over-leverage or force trades while waiting out the range, which can quickly breach daily loss limits. Managing position sizing during these quiet periods protects your capital so you are fully funded and ready when the breakout finally occurs. How do you usually trade a compressed market? Let us know below!