What is the deciding element in a trade’s success? While many may incline toward ‘buying low and selling on high’ or ‘choosing the right and reputed stocks’, the answer lies in the market’s volatility. The ongoing volatility is the prime factor behind spiking the idea of buying or selling a given stock.
While the volatility would compel one to buy the stocks in the hopes of a price increase, it panics the other to sell all their holdings, fearing losing their profits. The key difference between the novices and the professional investors is that while the former focuses on fear, the latter emphasizes finding opportunities in a volatile market.
Ultimately, these opportunities are encountered by relying on research-based analysis of proven effective strategies in a volatile market. The story herein is to wave away the initial concrete fear compiled by our mind upon tackling the market’s volatility, as volatility is an inseparable part of investing journey. Short-term traders are on the receiving end of these frequent ups and downs in the market, while long-term traders take a relaxed stance, as they are in the game of compounding. Nevertheless, these aspects can be dealt with with an altered mindset that becomes a game changer for every trader and investor.
Volatility & Strategies
From stocks to sip online, irrespective of your investment segments, the strategies to navigate the market’s volatility remain the same. While no single strategy remains optimal for every trader or investor, depending on an individual’s financial personality and habits, they can adopt any strategy to their advantage. A few of the effective methods in a volatile market are as follows.
- Diversifying Your Investments
Most investors only indulge themselves in the stock market and sip mutual funds; however, that does not comprise the entire financial market. Several other segments and investing instruments allow individuals to channel their funds to gain maximized returns. The distinctive element of every volatility is that not all investment segments are affected by the side movements of the market in one segment, and hence, diversification of your capital stands as an effective strategy in such instances.
- Markets Are Not All About Buying
Although new traders and investors explore the financial market intending to buy a stock and make profits in its upside movement, a segment also allows the bears to earn money by short-selling. Investors can utilize a volatile market by short-selling stocks and making profits from those who would adopt a downside movement. From Future & Options to Intraday, a trader has several options to short-sell in the market and leverage the downside movement to their advantage.
- Invest In Long-Term
Does the market’s volatility still bother you? The best play herein would be to adopt a long position and disconnect yourself from the concerns of slight shifts in your profits. In addition, an individual can also average out their stocks in such a market by buying their holdings at a lower price and accumulating more profits in the long run.
Instead of making panic and uncertainty your ally, you can embrace the shades of profits and asset-building by leveraging the market’s volatility with effective strategies. Every strategy is unique to a market’s condition; however, one can navigate the volatility conveniently by adopting these methods in continuity.