Increased Market Volatility = Opportunity
Posted on 15th June 2022
Recently we have seen an increase in market volatility. The War in Ukraine, the post Covid recovery, inflationary pressures and interest rate rises, energy and petrol price hikes, as well as cost of living standards increasing at a higher rate than real wages, have led to a correction in the stock markets.
This creates fear in the retail market, due to the uncertainty and the fact that a lot of people’s pensions and portfolios are seeing drawdowns seldomly seen during the longest bull market in history.
The truth is, it doesn’t need to be this way. A lot of people’s fear of the markets is misplaced. The increased volatility can actually provide increased opportunity, as long as you know where to look and are educated on how to take advantage of these market conditions.
Longer-term investment strategies are designed to withstand market corrections and drawdown periods. The risk is managed in a way that, even though you may be seeing a drawdown on your pensions and individual stock portfolios right now, when the markets recover (and this may take years – whence being a longer-term investment strategy), you will still be able to profit from the positions that are taking a hit right now.
With shorter-term trading, we can take advantage of the situations in front of us right now, whether the markets are going up, down, or sideways. We just need to be able to adjust our strategies and manage our risk responsibly.
‘’Look at the word responsibility—“response-ability”—the ability to choose your response. Highly proactive people recognize that responsibility. They do not blame circumstances, conditions, or conditioning for their behavior.’’ – Stephen Covey
Market volatility actually creates more opportunities for us, and when the markets are struggling, generally speaking, this creates more market volatility. This means, that as long as you are properly educated, you can make money from the markets even when your longer-term investment strategies are going through a drawdown period, helping you offset some of those losses.
Education is king. Trying to take on volatile markets without the knowledge of how to tackle them responsibly is a sure-fire way of compounding the losses already being taken on the longer-term investment strategies.
If you would like to learn more about how to manage your risk responsibly and profit from the current market conditions, come and check out our Expert Alert Service and Key Zone Traders Academy
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