Cramer's 'Mad Money' Recap: Profit From Fitful Markets

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Volatility can be scary, it can make you feel like you understand nothing about the market and it can make you feel like the market is positively bipolar, Jim Cramer told viewers of his "Mad Money" show Monday.

"But [it is] time to stop worrying and learn to love the volatility and make money off of it," Cramer said.

In his two-step plan to profit off of volatility, Cramer said first you must understand the market and then learn to trade off of it.

"The number one reason getting in your way of making money is lack of understanding volatility, he said. "You get volatility when the market cannot process supply and demand correctly."

When there is no volatility, buyers and sellers are in equilibrium. But this is not the state we are currently in, Cramer said. "Our equilibrium has been destroyed," he said.

The first source of volatility, Cramer explained, is that brokers don't position any more. Positioning is when hedge funds don't dump stock, but instead sell stocks slowly.

"This prevented volatility," Cramer said. But brokers have stopped positioning because it has become less profitable. "Commission is too low and interest rates are too high," Cramer said.

The second reason the market goes up and down really fast is because of new exchange-traded funds (ETFs). They move much faster than individual stocks, so when you buy or sell ETFs, the stocks in them either get crushed or lifted with a crane, Cramer said.

The third cause of volatility is hedge funds, which buy and sell stocks quickly, Cramer said.

"Hedge funds are pushing stocks up and down," he told his viewers. "You are at the mercy of mutual funds, pension funds and hedge fund accounts."