It is an interesting market that we are currently in. One day it is up couple hundred and the next it is down. All this volatility can play games with one’s mind, but, no matter what you do, DO NOT PANIC.
Use Patience
Normally I have no patience, but when it comes to the market I could wait years. Don’t know why, but I’m not complaining. Perhaps it is the money I have lost due to the lack of it in the past.
At first glance, you may think that with the pace these markets shift in opposite directions, one needs to act as quick as possible; however, just like quicksand, everything isn’t what it seems.
When the market falls heavily one day and then bounce right back up the next, many have a tendacy to buy. While that might not always be a bad thing, more often than not whatever stock you are looking at will probably come back down to the level you were first noticing it. Most likely it will happen RIGHT AFTER YOU BOUGHT shares. You have to remember that people are going to be taking some of their profits from that previous rally, which means selling that leads to lower prices.
Traders usually get scared, they sell, and suddenly they just compounded their losses. What makes matters worse, is that in the next couple of days or weeks, that stock will most likely be higher than whatever you bought it at.
While I don’t recommend you buying a stock on its first bounce up, if you just had to buy, then there is really no need to panic if the price goes back down. Try and wait it out; however, the best way to avoid this mistake is to use your patience.
Although the markets are moving at light speeds right now, there is actually no rush to entering into an investment. Over the last couple of months, all these bear and bull rallies have essentially canceled each other out. For example, the markets jumped last Tuesday about 400-500 points. By just looking at that one day gain you may have thought the worst is behind, but did you remember the 700 point loss we had the day before. So in actuality we are still in the negative.
The overall point to this article is to utilize your patience. Don’t chase after a trade. If you want to buy a stock set a limit order, and don’t budge on that price until it happens. It is always better to not lose money than miss out on some potential profit.
So use patience. When it comes to money, you will be surprised how much of it you really have.