Things to consider while trading stocks during the pandemic
The stock market becomes extremely unstable when the world experiences a global pandemic. Think about the current impact of coronavirus on the global stock market. Major company’s stocks are getting crushed and the investors don’t have any clear idea of what to do. Think about the price of crude oil. As the major companies are closed due to the coronavirus lockdown, the massive fall in the demand in oil has pushed the price of oil to the negative side. Such a catastrophic fall in the price of oil is recorded for the first time in history. So, it teaches us a valuable lesson that anything might happen to the stock market on such complicated market conditions.
We all know the famous proverb “Be greedy when everyone is fearful”. By using this simple concept, we can say, pandemic might offer us the opportunity to become a millionaire trader. Let’s learn about some of the key things we must do while trading stocks in such a global crisis.
Trade the data, not the emotions
Controlling the emotions in stock trading is very important during the pandemic or major market crash. Giving attention to the mass market audience is not going to work. For instance, people might be buying crude oil at a low price thinking it will go significantly higher. But this is a very big mistake. Unless you know for certain that the companies and industries are going to open in a few months, it is a very risky investment. You have to analyze the fundamental data while taking the decision to deal with the market. Navigate to this website to keep yourself tuned with the latest market news. Note that they can also provide you the best possible trading environment for the stock trading business.
Diversify your investment
When the stock market experiences a massive crash or downfall, you should not buy the stock of a particular asset. You need to diversify your investment so that you can mitigate the loss when you lose trade from one investment. Diversifying the portfolio is critical to your success. Unless you can follow this process, it will be nearly impossible to make a consistent profit from this market. The majority of retail traders are losing money because they don’t have the skills to invest in multiple stocks without using too much leverage.
Investing in multiple stocks is an easy task. Lower down the risk exposure and try to improve your skills by taking advantage of the demo account. In less than a few weeks, you will learn more about lot size variations and this will help you to diversify your risk exposure.
Focus on the historic price level
You need to focus on the historic price level when the stock market crashes. Most of the historic data in the market give the traders a decent clue where the market is heading. Taking the data from the hourly or even the daily chart is not going to work. The ideal time frame to analyze the market dynamics is the monthly chart. You have to know the fact, stock trading is not a short time business. You don’t need to execute trades every single day to make a profit. Just by using the core concept of trading, you can expect to make some great trades at the historic price level.
Stick to your trading method
The stock market might crash, but your trading method didn’t crash. You should stick to your original trading method and take the trades with low risk. If you do so, you can slowly improve your skills and become good at trading. Never try to break the rules because of panic, fear, or greed. The logic always remains the same and you need to follow what you see not what you believe. If you can do so, you can take advantage of a major stock market crash.