Discipline is key to surviving stock market volatility
Unless you have a crystal ball, there’s no way to trade geopolitical events. But these events have the potential to derail the stock markets.
This means the best way to deal with these events is to ensure you prepare for any eventuality. And this means discipline is your first line of defence, Marc Lichtenfeld in Investment U
Whatever type of investment strategy
you follow, discipline is key. Stick to your strategy and ignore ongoing news reports.
Look at your risk
Make sure you position sizes are appropriate. You don’t want too much exposure to one share or sector or asset class. You want to spread your investment risk.
Ensure your trailing stop losses are all in order. If the stock market takes a hit, you’ll minimise your losses and protect gains.
Trailing stop losses are a great way to protect yourself, but they do come with a downside. All it takes is a couple of bad days on the market for some stops to trigger only for the market to rally again.
But remember, that’s the whole point of using them. When you don’t know what’s ahead, trailing stop losses protect you from further downside.
What to do if the stock markets tank
If a geopolitical event does send the stock market sharply down, make sure you’re ready to take advantage of this too.
A stock market slide gives you the chance to pick up great shares at bargain prices. So make sure you have a shortlist of shares to buy if this happens. Be prepared for such opportunities.
So there you have it, an investment strategy to ensure your investments don’t suffer if the stock market takes a knock from geopolitical events.
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