What to do in volatile times?

Volatile times happen every once in a while in the market. Volatility is when the market is changing rapidly constantly. One day the DOW will be up 100 points the next it will be down 200 points.

What do you do when the market is unpredictable and acting up like this? The first thing you want to do is see if your system for trading is still working, THROUGH PAPER TRADES (you should do this every time the market changes). If it is that is great and you can continue to trade cautiously.

If it is not than you can do either one of two things. Many professional traders will say selling options can be a good thing to do, because premiums will be high. covered calls is a great example of selling premiums. I have also found that day trading can help you through the volatile times.
Both selling premiums and day trading can still be risky when the markets are going crazy. You could still lose money. The most important thing in trading is conserving capital. That is why I would recommend a second option, drum roll please, DO NOT TRADE WHEN THE MARKET IN UNPREDICTABLE. I know you might be thinking "I want to make money". You can when the market has made a clear direction or path. If you lose all your money when the Market is hard to trade you will not have the captial to make money when the Market is easy to trade.

Remember to develop your own systems. Successful Investors always use proper money management systems.

[X]

Social Bookmarks