Many would argue that stock trading is one of the last things they want to think of during a global pandemic like the COVID-19 outbreak. This might be true for the vast majority of readers, but then there is a small group of people who simply never pass up a chance to make a good sale, especially when you consider that the significant drop in stock values is allowing investors to buy stocks at very steep discounts.
However, you have to consider that stock markets are difficult enough to understand, even on good days. The impact of CoronaVirus just made the stock markets much more difficult to understand. And with a market that’s been on one of the worst downturns in the last decade, you might want to be a tad more cautious as you invest in the market. These are some of the investing mistakes that you absolutely shouldn’t commit during this pandemic.
Failing To Monitor The Market
As previously mentioned, the stock market is significantly more volatile because of the decrease in productivity caused by widespread business and jop suspensions. News events develop quickly and they cause major fluctuations in the market. It is especially important for short-term traders to be vigilant over the news and to also have a stop-loss order in place on all short-term trades.
Trading At Every Breakout
Breakouts tend to be more common during these times, and thus, traders need to be able to adjust their approach to account for the heightened market volatility. Again, it’s important to set strict and realistic take profit targets as well as a maximum stop in order to keep yourself from taking major losses.
Falling Prey To Availability Bias
It’s no secret that we have a tendency to react based on recent national or world events. This is not only natural, but it is also potentially life-saving. This does not apply to the world of trading, especially when one of the most important pieces of advice to heed is to formulate a rational course of action and to adhere to it as best as you can. Whether you’re deciding on insurance or sticks, never decide on a whim, and if you’re unsure, you can always consider hiring a forensic economist like the ones from The Knowles Group to help you get a more detailed bearing on economic trends, especially when you’ve got assets on the line.
The Importance Of Market Monitoring
The fact that the Coronavirus has made the markets much more volatile should be reason enough to warrant your vigilance. However, a more important reason is that unscrupulous elements are bound to take advantage of the widespread panic. Market manipulation is not only illegal, it is also dangerous to traders who, at times like this, may not have the resources needed to recover from a bad trade.
We live in dangerous times. This global pandemic is not only a threat to health, but also a threat to the economy. While it’s completely possible to bring in good trades, you have to remember that in these times a small mistake could cost you everything.