Downturn Trading Strategies: Patience and Risk Control

2020-02-25 | Simpler Trading Team

While the market continued its rampage downward, moderators at Simpler Trading held patiently to identify any opportunities.

Days like this require discipline not to chase FOMO (Fear Of Missing Out) while the market runs its course.

Moderators focused on pressures affecting the indexes while watching for individual stocks that might be bucking the down trend. Several stocks like ZM, GOOGL, and MSFT were down but all held their own through the second day of sharp selling.

It was noted that today exhibited some of the most intense selling many traders will ever see.

As the markets headed into the close, moderators watched for any signs of a turn.

There was a lot of bad news on the day, so moderators took cautious trades and promoted patience as a calm strategy.

Maintain risk control because such downturns are all part of trading.

We Saw: a second day of heavy selling — 

  • Negative coronavirus news sending fear through markets
  • Asset reallocation: money being moved from stocks to bonds
  • Largest two-day selloff since 2008

We’re Watching: for any signs of the market turning — 

  • Stocks like ZM, GOOGL, and MSFT that might hold up
  • Be cautious against a “buy the dip” scenario
  • Will there be a decent rally back to some support?

Learn more about navigating news and the markets — check out the Simpler Trading community HERE.