# Market Regime - Classify and Adapt to Dynamic Market Conditions **Last Updated**: 2026-03-17 **Version**: 1.0.0 ## How It Works ### Open the Market Regime Page Navigate to the Market Regime page from the sidebar. The interface provides a regime selection panel, indicator configuration area, and results visualization for classifying current market conditions against predefined or custom regime definitions. ### Choose a Predefined Regime or Create Bespoke Select from predefined market regimes (Trending, Ranging, Volatile, Low-Volatility Drift) or choose Bespoke to define your own custom regime. Predefined regimes come with recommended indicator configurations, while Bespoke allows full customization of the classification criteria. ### Configure Asset and Analysis Window Select the target asset, set the analysis date, and define the timeframe. The analysis window determines how much historical data is used to evaluate the current regime. Longer windows provide more stable classifications but may be slower to detect recent regime changes. ### Add and Configure Classification Indicators Add technical indicators that define the selected regime's characteristics. For Trending regime, configure directional indicators like ADX, moving average crossovers, and slope measurements. For Ranging, add bandwidth and oscillator indicators. Customize thresholds and weights for each indicator. ### Define Custom Regime Rules (Bespoke Mode) In Bespoke mode, name your custom regime, add descriptive notes, and define the specific indicator combinations and threshold rules that characterize it. This allows you to model unique market conditions such as pre-earnings compression, sector rotation phases, or seasonal volatility patterns. ### Execute Regime Classification Click Execute to run the classification analysis. The engine evaluates all configured indicators against their threshold rules and produces a regime score indicating how well current conditions match the selected regime definition. ### Interpret Results and Plan Strategy Adaptation Review the classification output including regime match score, individual indicator contributions, historical regime timeline, and regime stability assessment. Use the results to determine which strategy families are most appropriate for the detected market state. > Market Regime analysis classifies current market conditions against defined regime templates, enabling you to adapt your trading strategy to the prevailing market environment. ## Tips & Best Practices - Run multiple regime classifications in sequence (Trending, Ranging, Volatile) against the same asset and date. The regime with the highest match score indicates the dominant market state and gives you a comparative view across all conditions. - Use Bespoke mode to define regime templates specific to your trading universe. Different assets exhibit different regime characteristics: cryptocurrency regimes differ significantly from equity index regimes in terms of volatility thresholds and trend persistence. - Focus on the regime stability assessment in the results. A high match score with low stability suggests the market may be transitioning between regimes, warranting more conservative position sizing and tighter risk controls. - Build a regime monitoring routine: classify the market at the start of each trading week, record the results, and track how regime shifts correlate with your strategy performance over time. This historical log becomes invaluable for regime-adaptive strategy development. - Combine Market Regime classification with HMM Predictor for a dual-methodology approach. Market Regime uses rule-based indicator thresholds while HMM uses statistical pattern detection. Agreement between both methods provides the highest-confidence regime classification. ## Frequently Asked Questions ### What is a market regime and why does it matter for trading? A market regime is a persistent market state characterized by specific statistical properties such as trend direction, volatility level, and mean-reversion tendency. It matters because different strategy types perform dramatically differently across regimes: momentum strategies thrive in trending regimes but lose money in ranging ones, while mean-reversion strategies show the opposite behavior. Identifying the current regime allows you to deploy the right strategy at the right time. ### How does Bespoke mode differ from predefined regimes? Predefined regimes (Trending, Ranging, Volatile) come with standard indicator configurations and thresholds based on widely-accepted technical analysis principles. Bespoke mode gives you complete control: you define the regime name, select which indicators to use, set custom threshold values, and assign your own weighting to each indicator. This is useful for modeling niche market conditions that standard categories do not capture. ### How many indicators should I use for regime classification? Use 3-5 indicators for balanced classification accuracy. Fewer than 3 indicators can produce unreliable results due to single-indicator noise. More than 5 indicators often introduce redundancy without improving classification quality, and conflicting signals can dilute the overall score. Select indicators from different analytical families (trend strength, volatility, mean-reversion) for the most diversified assessment. ### Can regime classifications be used across different asset classes? Yes, but indicator thresholds should be calibrated per asset class. An ADX reading of 25 may indicate a strong trend in a stock index but only moderate trending in a volatile cryptocurrency. The Bespoke mode is designed for this purpose: create separate regime templates for equities, forex, commodities, and crypto with thresholds tuned to each asset class's typical behavior. ## Important Notes > Market regime classification relies on historical indicator behavior and rule-based thresholds. Regime transitions can occur suddenly due to unexpected events, and the classification may lag actual market changes. Always combine regime analysis with real-time market awareness and disciplined risk management. --- Source: https://stratcraft.ai/help/market-regime/