Personal Finance Tips to Make Money in a Volatile Market
However, truth is that market volatility is inevitable and happens more often than you think. In the short term, statistics prove that markets will move chaotically up and down. Therefore, trying to time it can be very difficult. A long-term mindset that ignores the near-term fluctuations should be the best way to go in this case. Following a good personal finance blog will provide you the best insights and strategies to take during a volatile market period.
A more radical approach to follow in a volatile scenario is to simply avoid it altogether. This means staying invested no matter how the short-term fluctuations are. This requires you to be mentally and emotionally strong, as it’s not easy to watch your portfolio dropping by 50%, for example.
Please notice that the famous “buy and hold” strategy doesn’t mean that you’ll make money by simply holding a stock for 10 years. These strategies are driven by the companies’ fundamentals in the long term, and volatile periods tend to present the best opportunities to buy into the market sometimes.
You should also be aware of other issues that happen usually in volatile markets that increase its risks even further. As volatile markets are always associated with high trading volumes, trading execution can be delayed, which could hypothetically also cause an order to be executed at a different price level than what you saw during your quote. Check out other personal finance blogs that have previously reported on this issue.
If this ever happens to you in an online trading platform, you should reach out to their support team, and be aware of how prepared your favorite platform is to deal with high volume periods. Sometimes, alternatives like mobile trades or over-the-phone brokerage are also available during these periods. In any case, don’t trust 100% whatever price you see on your screen.
Another good strategy to follow in a volatile market is to create limit orders instead of market orders. What does that mean? Market orders are executed immediately, there is a chance you don’t get the specific price you wanted, especially in fast markets, such as stocks, oil and currencies.