Market Regime

Purpose

Characterize the environment before selecting a strategy. A strategy that works in a trending, low-volatility regime frequently loses money in a choppy, high-volatility one — and the most common cause of a strategy "stopping working" is a regime change it was never designed to survive.

When to Use

• Setting overall exposure and strategy selection.
• Explaining why a strategy that worked has stopped.
• Assessing whether conditions favor trend-following or mean-reversion.
• Periodic review of the environment.

Capabilities