What happened to the stock markets in early March?
Anyone at all complicated in investing or trading no doubt personally experienced
it - the stock markets went through a major correction! And in these days of the
"World Economy" such a correction can be triggered by news from anywhere in the
world.
As it did this time. Poor economic news from China prompted a sharp world
decline in stock prices in just a few days. And many investors, especially long
term investors made big losses.
And they're probably asking: "Is there some way
I could have avoided manufacture losses while that period?"
Well, the rejoinder is absolutely Yes.
Obviously trying to predict such a correction and get out before it happens is
extremely difficult, and absolutely more a matter of luck than anything else. But
by diversifying your trading strategies you can undoubtedly avoid losses while
such times - and in fact make salutary gains instead!
The key is to employ a mix of trading techniques that take benefit of a
variety of trading timeframes.
Avoid putting all your eggs in the "long term" basket and look at complementing
your trading with styles that make returns over the shorter term as well:
- Swing trading is an exquisite way to capitalize on market movements over a
period of just a few days or weeks.
- Day trading of course, allows you to make returns on stock movements within
just one day.
And, mix up how and what you trade:
- include Short Selling in your trading techniques. By selling a stock or index
short, you are seeing to profit from downward moves. This is just as valid as
trying to get in low and sell high. And provides an leading hedge against a
market correction
- Also, there are now Inverse and even Double-Inverse indices that can be traded
quite easily. Dog is the fastener for the Inverse Dow 30 Index and Dxd is the
Double Inverse Dow 30. By owning these, you are essentially short selling the
major stock indices.
And, contrary to popular belief, it is not difficult to begin trading in this
manner. Over the years online trading has exploded in popularity and, as a
result, the resources, tools, strategies and infrastructure available to the
ordinary investor have become enormous.
- Online brokers offer trading accounts with very low commissions that
allow investors to trade all kinds of dissimilar instruments (stocks, options,
futures, forex) over all kinds of dissimilar timeframes (day trading, swing
trading, long term trading.)
- A large estimate of trading strategies and systems are also available online.
And many such systems, like http://www.intradaytrades.com , for example, offer a
spectrum of short term and longer term strategies in a particular service.
- And online trading platforms have become very sophisticated, offering complicated
analysis tools and even the ability to invent and back test trading strategies.
So, what uncomplicated steps can you take to profit while rising markets And market
corrections?
- Long Term trading: Allocate a portion of your trading funds to long term
investments (over many months). Make your returns from the comprehensive market trends
- remember to take those gains periodically so that you're not caught by a
sudden downturn. And look to include some of those Inverse Indices in your
portfolio. They can act as a titanic hedge against market corrections.
- Medium Term trading: Allocate a portion of your trading funds to Swing
Trading. In this way you capitalize on the medium term trends in the markets or
individual stocks. Roughly all financial instruments go through these medium
term swings as traders are permanently trying to determine the right longer term
price through reserve and resistance levels. And by taking both Long and Short
trades on these swings you stand to profit in both directions!
- Short Term trading: Allocate a portion of your trading funds to Day Trading.
This allows you to thoroughly take the longer term market factors out of the
equation. By trading within a particular day, it absolutely doesn't matter that there
was a long term correction. You profit anyway. With the right strategy, you
would absolutely identify the occasion to go short presented on the day(s) when
there is a market correction. And by selling short you stand to make titanic
gains that day!
- Ask your broker how to set up an inventory that allows you do trade in this way.
You'll be surprised at how uncomplicated it can be to get setup.
Much is written about diversifying your investments. But don't just look at
diversifying your holdings. Diversify your trading strategies too.
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What Has Gotten Into The Stock shop Lately?
