Stay Safe – Don’t Trade Panic Markets
Several days ago I warned S&P Emini traders that they should NOT trade panic markets. Back then, on March 12th, the stock market suffered one of its largest losses in history. Today is March 16, 2020 and the Dow Jones industrial average is down over 2,250 points; the S&P is down 220 points – and in spite of the Federal Reserve lowering interest rates to 0. As I write this, all trading has been halted in the stock market, as losses have exceeded their trigger point where trading is halted for 15 minutes.
This of course being the result of the coronavirus pandemic. With markets in a state of panic, the previous trading sessions have begun with huge losses over their previous day, except for one or two days where “mysterious” forces intervened to prop up prices, only to be whacked down again by the realities of huge declines in economic activity worldwide.
If you are a trader but without years of experience, you might feel this is a perfect time to make a killing, figuring the market will head down throughout the trading session. Nothing could be further from the truth. And the truth is that in markets such as this, the best thing to do is to stay on the sidelines and not trade. This is a whipsaw market, with huge swings, both down AND up, over minutes or even seconds. Be smart and do not trade while markets are in a state of panic. If you do, you are more likely to be stopped out with maximum losses. If you’ve taken my course, you know that my number one rule is “when in doubt get out”. In this market, do yourself a favor and stay out until things settle down.
This video is a repeat of the one in my previous post, warning you not to trade. It’s about rules – and if you don’t have a rule about trading in panic markets, then I’ll give you one: DON’T! Stay safe, forget about making a killing. The one who will likely be killed is YOU!
The whole idea of trading is regular, steady profits over a long period of time. Trading in a panic market can wipe out a big chunk of previous earnings.
Good advice from “Cousin” Marv that you should take.
