Four tips for handling market volatility
If you started buying during the fizzier months of 2021, recent volatility might have left you with whiplash. Wasn’t Bitcoin just at an all-time high in November? It can be hard to stay calm when markets start to shift, but it’s a lot easier to make smart moves if you have a plan.
Keep emotions out of it. It’s okay to feel anxious, but don’t let anxiety dictate financial choices. Emotional trading can lead to badly-timed trades, like selling when prices are lowest or buying at a peak due to FOMO.
Think ahead. Buying and holding isn’t right for every asset, but during a market downturn, consider your long-term goals. Did you buy with the intention of selling many years in the future? If so, it’s probably ok to stop refreshing that tab and take a deep breath.
Consider dollar-cost averaging. Dollar-cost averaging is a popular strategy for reducing the sting of volatility and taking emotions out of trading — it involves buying a smaller amount every week or month no matter what the market is doing.
Trade within your limits. Are you planning to “buy the dip?” Remember: No matter how confident you are about a particular asset, you should never put in more than you can afford to lose. (And when in doubt, speak to a trusted and certified financial advisor.)
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