This is a VERY exciting week for my Trading Challenge students, as there’s not one, not two, but three live webinars from my first millionaire student HERE, my second millionaire student HERE and one of my upcoming millionaire students HERE…all three are not just self-made, but they’re also self-sufficient and they’ve gotten VERY good at helping me teach and mentor others too, so I’m SO excited!**
Download the key points of this post as PDF.
As for the overall market, well, that’s a different story, because while it’s never necessarily entirely predictable, there are times when market volatility impacts penny stock trading…like right now. Times like these can definitely be tough on traders, whose carefully honed processes don’t work as well…so you must learn to ride the market no matter what it’s doing.
So what’s a trader to do when the overall market is unpredictable? Here, I’ll offer some tips for how to handle these hard times and how to keep your senses, so that you don’t go into a tailspin. These tips will help you stay the course and will help you become a better day trader.
1. Try to identify the reason for the market volatility. Sometimes, if you dig a little, you can detect what is causing the rapid ups and downs in the market. For example, sometimes, there is a world news event that can affect the market and it is pretty easy to identify.
Other times, you can chalk it up to simple inevitability…like I believe what’s happening now after FAR too many months and years with no significant pullback. Interestingly, the market is frequently unpredictable following long periods of peacefulness. That is to say, when the market seems like it has been stable for a long time and then goes volatile, to a certain degree it’s a natural occurrence. Enthusiasm and confidence can become high during the calmer times, which can make it seem even scarier when the market takes a turn.
2. Acknowledge that the market has shifted. Particularly if you’ve been performing well in the market, a shift toward volatility can be a tough pill to swallow. After all, you’ve been working on and honing your set up, perfecting your methods and making reliable money. A market shake-up can transform your trading methods from effective to ineffective seemingly in an instant.
Unfortunately, as I outlined in my video lesson HERE yesterday, you need to accept it. Just trying to make trades work the way that they did before probably won’t result in large gains. This doesn’t mean that your set up is faulty or that you’re making bad trades, but you simply have to shift your mentality and methods to suit the market as it is now.
3. Evaluate other potential opportunities. Here’s the “when one door closes, another opens” pep talk. When the market is volatile, instead of focusing on how things were in the past, look to the future. Evaluate other potential investments and opportunities. For example, this might be the time to look deeper into short selling or another trading technique that you’ve been hesitant about in the past. When the market changes, you have to be able to change with it, even if that means stepping out of your comfort zone. This is why I approach many different styles of trading with the Tim Sykes Millionaire Challenge team.
4. Re-focus on your education. When the market is volatile, it’s the perfect time to regroup by hitting the books. Expanding your knowledge about how trading works in general is always helpful here, so it might be helpful to take a refresher look at my Penny Stock Trading E-Guide or to revisit my teachings via the Tim Sykes Millionaire Challenge.
It’s also a good time to look at how periods of market volatility have performed in the past. Looking to how traders made money during prior periods of volatility can inform you about what directions you might want to go in.
5. Look at who is making money. Even during volatile times in the market, someone is making money. So, who is it now? This student of mine is doing pretty well now, see how he’s doing it! Scrutinize what it is that they are doing. You never want to copy their techniques exactly, but often, if you look at the general style of traders who are making money during times of market volatility, you can glean tips for how you might proceed and trade successfully too!
For example, if you see that four separate traders are making money by short selling tech stocks, this might be a trend worth looking into. You never know where you might pick up an idea!
6. Remember: panic is not a strategy. Panic can make traders (and anyone, really) do stupid things. Don’t fall prey to the scattered and desperate thinking that can accompany panic.
Panic is not a strategy. What is a strategy for surviving market volatility, though, is careful planning. Now, more than ever, as the market experiences rapid ups and downs, you have to make very clearly defined trading plans wherein you define your setup and your entry and exit strategy. Then, you need to stick with it. It might not be glamorous, but it’s one of the best ways to survive the volatility.
7. Consult with your mentor. When the market is volatile, it’s the perfect time to connect with your mentor. Remember, he or she has been at this longer than you and they have probably experienced bouts of volatility before.
Frequently, your mentor can offer insight into what goes on during periods of volatility and can absolutely offer words of wisdom for survival during these challenging times.
8. Don’t give up. It can be really tempting to quit when the market becomes volatile. After you’ve been gaining confidence and prowess in a more peaceful market, it can really feel like the carpet has been pulled out from under you.
Change is inevitable and periods of market volatility come with trading. If you quit now, you’ll never get to learn what you could be capable of. These are the times that can define you as a trader. Do you have what it takes to ride this out?
When the market becomes volatile, it can be a challenging time for any trader, regardless of their experience level. By following these tips, you’ll be better able to maintain a level head when things become tough, so that you can not only survive but thrive as a trader. If you can deal with hard times, you’ll be better prepared to enjoy and trade successfully during the good times!
How are you dealing with this market volatility?Be honest with me and yourself, and leave a comment below, maybe I can help you too!