What to do when the stock market is volatile
When the stock market has a lot of volatility as it has had in the last couple of weeks is great for day traders. I wouldn’t say it is good for swing traders because of certain reasons. The market is going up and down every day with big moves. Their stops can be hit and then be up in their stock positions the next day. For day traders it is essential that they know how to trade this type of market. They need to look a few things. I personally just like to look at three. The first is where the market is going that day. Look at high named stocks. Also, different types of EFTs if the stock market is affecting certain sectors. This has always helped me trade a volatile market and I have always came out on top of it. Just because a stock trader doesn’t know how to trade it or doesn’t come out on top, doesn’t mean you can’t. If the stock market is volatile you want to see which way the stock market is going. I like to short the stock market when it gets like this because a lot of stock traders start to panic and sell their stocks. What you like to see is stock traders sell their position and see the volume come into stocks. When you see the stock markets start to sell off you will see them not obey any of the technical indicators on the stock chart so you have to have a stock trading strategy that will do well in this type of market. There are a lot of experience traders looking for stock traders who don’t know how to trade these types of markets, In that way understanding stock market is very important. Make sure that you set your stop loss and take profits quick. The next thing I like to do is trade high named stocks. The reason why I like to do this is because you are able to get in and out quickly and get great prices. Since there is a lot of volume you will never have to wait for you to get in line to buy stock or sell stock. What you want to see here is since they are big named stocks they might be high priced stocks. If they are you can get a good profit. For example, if you find a stock that is work around $110 then you could get a couple of points for a profit. There have been times where I have gotten 3 to 5 points in a matter of 2 minutes because of a volatile stock market. Lastly is look for EFTs the reason is because you are buying a lot of stocks in one. You are buying stock in a lot of stocks at the same sector. Since the stock market is going down you can look for bear type of ETFs. For example, if you are looking at the stock market and see that the financial sector is falling quickly, you might want to trade FAZ which is the EFT that goes up when the financial sector is going down. It is also the triple short so this stock moves quickly. You are going to have to have a fast stock trading platform to get in and out of your stock position. I have traded like this for a while now in these types of markets. I do well because I have stuck with these tips. I always have a stock trading strategy that I found out that works in this kind of market. I practice it in a virtual trading platform because I don’t lose any money there and I can make as many mistakes there.
