Good afternoon ladies and gentlemen,
(this will be a long post, but especially new traders might benefit from taking the time to read it )
Today the $GER40 is trading lower yet again, after blood-red data on GDP and consumer confidence.
We are seeing some increased volatility on the market and the daily ranges are increasing, with the dip buyers trying to hold the downside from breaking. But they do not get very far to the upside before again renewed weakness sets in.
Also, the $FRA40$DJ30$NSDQ100 and the $SPX500 are on the back foot today. Of course, the dip buyers could give it another shot, bringing us upwards again, but the pressure is to the downside.
Dip buying has of course been quite profitable the last few months, but it now has got lesser and lesser effects and we see that after the dips, we don´t really reach the higher levels as we did before, so be very careful, as there are a lot of dangers lurking out there and at some stage buying the dip could be like catching a falling knife.
I am of course not saying that the market will not correct from this point, as corrections do occur, but this somehow looks a bit different, with the increasing bearish pressure.
I know that a lot of new traders with little experience have joined Etoro and other platforms, especially since the crash in 2020. There was a lot of money to be made, buying stocks at very favorable prices and holding on to them. But remember that even Donald Duck could have done that, as it had nothing to do with skill as the market simply just kept rising for the better part of 2 years now.
The real skill is not to make a profit but actually to keep the profit and I guess most stock traders have experienced that to be difficult in the past couple of months, where most stocks took a significant drop. As I said then it could all turn around today or next week, but looking at the dangers out there, with Ukraine, inflation, supply chain issues, corona restrictions, and China zero covid policy, you really need to be very careful.
I am not trying to teach you how to trade I am simply just making you aware of the dangers, especially during these market conditions. What you do is up to you of course.
But a good way to prepare for a potential market crash is of course to part close positions at higher levels, then add the profits on drops, and always avoid leverage on stocks, as the rise in the stock market is like taking the escalator, but crashes are like elevators and much more aggressive.
Also do not spend all your funds at the top levels, but be patient. I for instance always took part profit or full profit after 10-20% rises and then replaced the orders back at previous entry and I had more than 80% of those orders also at ridiculous levels triggered.
Just buying stocks and thinking that the rise we have seen in the past 2 years just will continue, is pretty naive, because at some time there will always be corrections and crashes coming up.
Also, study and look at the past, not only at the future, because the Corona crash in 2020 was much more different than most previous crashes, it dropped a few months and after 3 months it was basically back up where it started to drop. But trust me, it is not always like that. So unless you have a very long-term strategy of like 20 years, you better learn how to trade stocks and not just buy and hold.
In 2000 the dot-com bubble burst and there was a major crash it took the market 7 years to recover back up to where it started. In 2008 the financial crash needed 5 years to get back to where it started. The spx500 tanked 53% on the drop, so even a leverage 2 setup would have crashed.
I am not saying there will be a crash, but we have a lot of Grey swans out there, so we are at a bigger risk than we have been in a long time. So please always take these scenarios into your calculations. And even if the market recovered in 5-7 years, you still lost due to the inflation lowering the value of your funds in those years.
So if you do not have a plan B it would be time to start working on one.
Let´s hope that also this time the market will recover, but hope as a strategy basically never worked, so bear that in mind.
I wish you all a nice and profitable end of the week and a lovely and relaxing weekend to follow.
All the best
www.breakingthenews.net/Article/Europe-extends-losses-after-disappointing-data/57173749... Show More
Ciao, leggo sempre i tuoi post, sono molto interessanti, precisi e ricchi di spunti. Personalmente credo che non ci siano molti compratori in calo, anzi, credo che con l'inflazione e l'aumento delle bollette non ci siano proprio più compratori e di conseguenza soldi da far girare da parte dei piccoli... Show More Translate
Danke Aleks, ich hoffe sehr viele neue lesen deinen Artikel.
Es ist manchmal erstaunlich, wie die Leute hier einfach so ihr Geld verzocken.
Die Medien tuen da dann nur noch ihr übriges. Im deutschen TV (N-TV) gibt es zb. NIEMALS stimmen, die etwas negatives sagen. Ich verstehe es einfach nicht...
Man... Show More Translate