Top Trading Strategies for Times of Economic Turmoil Aug 4th
At present, we live in times of economic turmoil and market downturns. The Brexit news of June caused a lot of uncertainty in the market and, with a US Presidential election on the horizon in November, this uncertainty and economic turmoil looks set to continue for the remainder of the year. So, with this in mind, how do you navigate the markets in these turbulent times? In this post, we take a look.
Just Play Dead
In times of market turmoil, the markets turn into a ‘bear’ market. As such, if you’re adopting a ‘bullish’ trading strategy, you’re probably in trouble. As such, many experienced and wily old traders have a saying: “when the markets are bearish, just play dead”.
This doesn’t mean that you become inactive, it simply means that you put even more thought than usual into your trades, and you certainly never trade on a whim. Instead, you simply have to remain calm and vigilant, without making any sudden moves. Make sure that an increasing part of your portfolio is held in money market securities. This way, you may bypass the brunt of the volatility and can ride it out until the market becomes bullish again.
Diversify your Portfolio
Sometimes, when the markets move against you, you just have to go back to basics. As you gain experience in your trading career, you tend to steer away from the basics. This isn’t because they no longer apply to you, but instead because you’re more willing to take risks.
However, in bearish times, it’s time to return to basics, and one of the most basic things you can do is properly diversify your portfolio. This means you should ensure that you include: stocks, bonds, cash and other assets. Here, dipping into the forex market with a broker like Oanda could also be a good move if you traditionally only trade in stocks and shares, as it means that you stand a greater chance of navigating risk and maximising opportunities.
Of course, how you diversify depends on your trading strategy and the level of risk that you’re willing to take. Your situation will be very different to others, so don’t pay too much attention to what others are doing. Never invest money that you cannot afford to lose just for the sake of diversification. Bear markets can be very destructive and you don’t want to get swallowed up.
Look to Defensive Industries
Defensive industries, or safe havens, are your friends during bearish market, as they generally perform better than the average stock does. So, think about what you can invest in that will be used regardless of the performance of the rest of the economy. Everyday household items such as toothpaste may sound like an obscure investment, but toothpaste is used just as much in hard times as it is in good, making it a sound investment in bearish times.
Aug 4th
At present, we live in times of economic turmoil and market downturns. The Brexit news of June caused a lot of uncertainty in the market and, with a US Presidential election on the horizon in November, this uncertainty and economic turmoil looks set to continue for the remainder of the year. So, with this in mind, how do you navigate the markets in these turbulent times? In this post, we take a look.
Just Play Dead
In times of market turmoil, the markets turn into a ‘bear’ market. As such, if you’re adopting a ‘bullish’ trading strategy, you’re probably in trouble. As such, many experienced and wily old traders have a saying: “when the markets are bearish, just play dead”.
This doesn’t mean that you become inactive, it simply means that you put even more thought than usual into your trades, and you certainly never trade on a whim. Instead, you simply have to remain calm and vigilant, without making any sudden moves. Make sure that an increasing part of your portfolio is held in money market securities. This way, you may bypass the brunt of the volatility and can ride it out until the market becomes bullish again.
Diversify your Portfolio
Sometimes, when the markets move against you, you just have to go back to basics. As you gain experience in your trading career, you tend to steer away from the basics. This isn’t because they no longer apply to you, but instead because you’re more willing to take risks.
However, in bearish times, it’s time to return to basics, and one of the most basic things you can do is properly diversify your portfolio. This means you should ensure that you include: stocks, bonds, cash and other assets. Here, dipping into the forex market with a broker like Oanda could also be a good move if you traditionally only trade in stocks and shares, as it means that you stand a greater chance of navigating risk and maximising opportunities.
Of course, how you diversify depends on your trading strategy and the level of risk that you’re willing to take. Your situation will be very different to others, so don’t pay too much attention to what others are doing. Never invest money that you cannot afford to lose just for the sake of diversification. Bear markets can be very destructive and you don’t want to get swallowed up.
Look to Defensive Industries
Defensive industries, or safe havens, are your friends during bearish market, as they generally perform better than the average stock does. So, think about what you can invest in that will be used regardless of the performance of the rest of the economy. Everyday household items such as toothpaste may sound like an obscure investment, but toothpaste is used just as much in hard times as it is in good, making it a sound investment in bearish times.
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