Trading on the stock exchange in a crisisBarry Copeland 30 / March / 21 Visitors: 112
A number of points for traders in crises
Crises and various global changes are part of our lives. They have always been, and always will be, and with the passage of time and an increase in the intensity of the vital rhythm, there will be more and more of them. And the natural question is what to do at this time to the trader. It is important to understand a number of points.
- The crisis is more predictable, it is intuitively clear how quotes will change. Of course, this will not be immediately, but the final result is known in advance. The EU is doing bad - the euro will fall. This is an advantage of analysis, and a trader can take advantage of it. Of course there will be currency fluctuations, and a currency like the euro will affect many other assets, but, nevertheless, in such a situation the result is obvious. Hence the conclusion is that a crisis is a favorable moment for making a profit in the profession of a trader, which is associated only with assets in the form of currency pairs, and is not burdened with production, the market, the need to transport its goods, go through customs, and so on. Our asset is money, the most liquid, quickly converted to other currency pairs.
- Although the end result is clear, the crisis is characterized by large and sharp changes in course. And you need to understand that this is a big risk - and the delay in execution can be a gap after the weekend, or whatever. And this imposes restrictions on MM, and especially on the size of the lot. The size of the price change will be significant anyway, you know the direction, it makes sense to switch to a well-predictable medium-term trade and lower the lot. Due to the large number of points - the profit will be great.
- The pattern is clear, those who have little money lose them in a crisis. Those who have a lot of money get richer during the crisis. This comes from the second point, rich people do not have to rush anywhere, they correctly invest in the future situation, and the poor want to grab at least something, and lose all the money on intermediate fluctuations.
For speculators, I think there is no particular problem with earnings. For him, what goes up and down, quotes go - it does not play a special role. Of course, we are talking about those speculators who know how to make money on stock speculation. But for investors, the crisis is a real torture. I mean those who prefer to buy stock assets for a very long time. It’s hard to say how to prepare for it. And even more so how to act in the midst of it.
Taking into account what is written above, we can distribute the scope of assets. If we need maximum profit, and we will comply with MM, then we need an asset in which the side in the crisis is opposed to its opposite, the currency that goes uphill. If we need the other way around, maximum stability with a low profit, then we need to choose assets that are stable and to a minimum extent depend on the asset in which the crisis is observed.
A trader should remember that most of the capital formed due to a number of successful actions, just in times of war and crisis. Undervalued exchange assets. For example, shares of multinational companies. This most additional reserve will be like an airbag and will give psychological comfort that for the future, even if it’s scary, there is a certain algorithm of actions.