When the Market Drops – Two Opportunities

While Buy & Hold investors ride out market slumps, corrections as some call them, those of us who trade based on technical analysis try to avoid taking substantial losses.

Technical trading almost sounds mysterious, but it just means trading based on the analysis of a symbol’s price movement. This can be complicated or simple which is why I let my investment software do all the work.

 

Market drops afford two opportunities:

The first opportunity is to shed the under-performing positions in your portfolio. Perhaps even get rid of the so-so performers. Do this when there are indications that either the market is definitely going to go down further, the trading strategy itself is on a down-slope, or the symbol has been going down or nowhere for some time.

The second opportunity is equally important, perhaps more important. This opportunity is all about being ready. You want to be ready to pounce when the market turns. Perhaps not for just a day, but at least a few days or a week of upward movement.

Buy - sell Investing Choice

Pouncing means you have trading strategies in place that you are watching every week. It may also mean you have a few key symbols in mind for future investment. In any case, you want to be ready to act when the market turns, not six months later. The biggest gains will be had in the first weeks and first few months after a market recovery begins. So stay focused, stay ready.

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