The hottest rage now is definitely the trade war between US and China.
Volatility is high and the danger of an escalating trade war looms around the opening of markets on a day to day basis.
If you are trading based on trends right now, then you are going to get your ‘behind’ whooped hard.
If you have been tracking the expected move of the S&P 500 on a weekly basis, we are out of the long-term expectation right now. We are hitting the extremes on the weekly boundaries: well over 66% of the time since the year began.
Are we in a correction phase now? Are we officially in a bear market now? Are we still going to see another new high?
To put it bluntly, I don’t know, and I’ll bet that no one does as well.
However, one thing I’m sure of and I’ve learnt over the years is that consumerism wins!
If the consumers are still buying and still spending, then the economy will continue to tick upwards and the corporate earnings are going to continue to stay strong to hold the markets together.
Anything else apart from this fundamental change is merely short term.
So, if you find yourself shaken from the trades you are taking on during this period, there are a few things you can take note of to ensure you begin to yield better performance and results – possibly even surviving this humbling period for many traders, even the most seasoned ones.
If you are stressing over your positions, you are trading too big
The hardest thing to accomplish is risk control and risk management. When markets were rip roaring in the month of January, it should have been the month where investors should be locking down their profits and loosening up all the capital ‘stuck’ in the markets.
Holding cash was perhaps the hardest yet smartest thing to have done in January this year. All that cash, or more than half of it, could have gone to work in the following month after the flash crash on severe market sell-off days to scoop up some of the best companies in the world at ‘fire sale’ prices.
During such situations, markets are always irrational in the short term and no stocks are spared. And I mean no stocks.
It is usually when the panic dies down, do they realize that perhaps it was a little overdone. That’s where you see many of these same great companies and stocks recover from their sell-off.
IMPossible Investors are well drilled and well trained to hunt down these great companies and great stocks we coin as IMPossible stocks within our community. We latch onto them like leeches when market throws such opportunities at us.
IMPossible Investors locked down a 1.1% return in a week on Exxon Mobil, 2.1% return over 4 weeks for Coca-Cola, and 2.4% return in 3 weeks for Royal Gold amidst this volatile period that has left many short-term traders with a bad aftertaste.
We continue to look forward to more great income trades with the recent volatility ongoing in the market place.
Are you game as well?
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This article was written by Terence Tan, Chief Investment Strategist of Giants Learning Technologies