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EXPANSION VS CONTRACTION

The rise and fall of volatility.

Published by The Retail Trader · JUL 31, 2026 · Market Structure

Expansion vs Contraction — expansion and contraction of Volatility. Small range is followed by larger range, and vice versa.

WHERE THIS FITS IN

This term comes under Market Structure, in the “MOOD OF MARKET” section. And finally, the market hovers between these three states — the strategy has to change accordingly:

RELATED TERMS TO READ

Other terms in this group — understanding them together is more useful:
• Trending Market
• Range-Bound Market
• Choppy Market
• Opening Range
• Intraday High / Low
• Volume Confirmation

To read the entire group and all its examples in one place, see the journal "MARKET STRUCTURE: LEVELS, ZONES and SWINGS" - this term is taken from there.

This entry is for educational purposes only and is not a recommendation to buy or sell. Exchanges change charges, margins, lot sizes and expiry rules from time to time, so verify any figures with your broker or exchange.

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