How to Understand Stock Market Fluctuations
If you are in business, you know that market fluctuations are a common practice in the industry. The stock market is very unpredictable. Today the market is doing so great, and come tomorrow, the numbers drop without any iota of a warning sign. When this volatility hits the market, you cannot afford to burry your head in the sand. Instead, manipulate the situation to your advantage.
Just like the saying when one door closes, a window opens, there is a way you can make profit in a fluctuating market. Challenges are one way of separating the chaff from the wheat in the business industry. You see, the stronghold of a business is being able to stay afloat when the world is sinking.
How To Make Profit in a Fluctuating Market
- Play the time zone game- This is the point when you become extremely grateful for differing time zones in continents. Smart investors follow closely operations of major markets, which in most cases is an indicator of how stocks will open in the United States. Use the night information to strategize your moves in the morning. Regardless of whether the market is volatile or not, you will have an upper hand.
- Cash on market open and close- This is a sure way to make profit during fluctuations. Simply sell your shares at the close of the market, and profit will trickle in. You see, the opening and closing prices are largely influenced by investors. In the course of trading, company developments and economics, begin to shape the prices.
- Make use of pre market prices- Just because everyone is investing does not mean you ditch yourself in the hole. The behavior of market prices will help you make profits and avoid loses.
- Be aware of company developments- It is important to monitor your counterparts in the industry. If a new product is being launched, be scheming and buy stock before an official word of the developments gets out. You may end up benefitting big time from such developments.
- Use the limit feature- This is a risk management strategy that enables investors to establish their higher stock prices. Mostly, the limit does not exceed 4%. You see, the urge to invest in the market may be higher when prices go down. The risk however is that, you might think the prices would bounce higher, instead they plunge lower. In such a case, the limit feature makes it possible to reduce the percentage and lower the price before sealing a deal.
- Be quick to move, depending on the mood of the market- Analysts make life easier by breaking down speculations for investors. Before an analyst sets an agenda and gets everyone talking of the same speculations, do not be quick to share your sentiments. This confirmation, gives you a go ahead to sell or buy, before all and sundry catch wind.
- Diversify- Do not stock all your eggs in one basket. Even if you are good at playing with the numbers, always diversify and have multiple investment sources.
You would be surprised that there are investors who wait to make large profits when the market gets volatile. One man’s meat is surely another’s poison. The key to making profits and surviving will always be learning to adapt in whichever situation.
