The arrival of an economic recession will make trading on the stock market much more complicated from now on. Where only investors who have more learning in these movements or those who prefer for the commercial operations they will have the possibility of making capital gains in the stock markets. Whatever the case, and to be more positive, it must be remembered that business opportunities always originate in the stock market. Even in the most adverse scenarios for financial markets.
On the other hand, it should be emphasized that this new scenario will require small and medium investors to be more adept at developing their investments. Where it will be essential to be much more selective that up to now in the choice of the securities that will make up the portfolio of securities. Even though in any of the cases the supply of this class of securities will fall substantially. There will be very few that should be on our operations radar.
In the event of an economic downturn, as the latest macroeconomic data shows, the selective stocks index may head to levels not seen in recent years. It would not be surprising to be direct up to 7,500 points or even demolish the psychological level it has at 7,000 points. Whatever the case, the drop will be very significant and will affect any investment strategy. In other words, from now on it will be much more difficult to successfully monetize the capital invested in the equity financial markets.
One of the keys to the success of trades made in bearish movements is that they are aimed at the shortest possible permanence periods. It is the only way collect rebounds that occur under this trend. These bullish movements do not have a specific duration since they can last a few days or extend to a few weeks. Depending on the intensity of the same and the buying pressure that develops in those days. Therefore, it does not make sense to extend the terms because in the long run we will always lose out on our positions in the stock market.
On the other hand, in short-term periods we can always make a profit even if the underlying trend is clearly downward. In other words, we can take advantage of this little trick in the equity markets to obtain a few euros that will go to our savings account each time this movement is executed positively in the stock market. It is one of the few self-defense mechanisms available to small and medium investors to come out alive from their attempt to invest in financial markets. At the same time, it is a strategy that is not excessively complicated in its application.
This is not a formula to make our savings profitable. If not on the contrary try limit possible losses that our investment can bring us. Fundamentally in deep bearish movements because we can erase a very important part of the invested capital. Because the stock markets can be falling for many months or even years. It is necessary to avoid by all means that this unwanted situation arrives on the part of small and medium investors. In an attempt to preserve our money over other technical considerations.
While on the other hand, it should also be noted that downward movements in the stock market are more likely to develop operations that in the end we will have no choice but to settle them with poor sales. With the purpose of equip yourself with liquidity in the face of any need in the national economy of share users. As an example, the amortization of a line of credit, debts before third parties or face the most necessary expenses in daily life. Well, in this sense, a limit loss order can help you make your losses in the stock market no more voluminous. It will always be better to stick with the 2% rather than the 10% or 20% of the investment.
Another key to surviving an adverse scenario for equity markets is to trade only in securities that offer high liquidity to investors. With a double objective, on the one hand that they can adjust the entry and exit prices of the Stock Market to their liking. And on the other hand, to avoid get hooked in their positions as a result of their low liquidity. Regularly, this class of securities coincides in its purpose with those of smaller capitalization and that are listed in the secondary indices of the national variable income. As an example, Deoleo, Sniace or Natra, to name just a few representatives of this very special group of listed companies.
On the other hand, values that are very illiquid also cause problems that can be manipulated with very few values. To the point that they can move them with great violence, in one direction or another and in general in charge of strong hands of financial markets. Where the small and medium investors themselves have very few self-defense mechanisms to preserve their positions and consequently are in a position to lose a lot of money in each of the open operations. It is possible that you yourself have been a victim of such a movement.
At the same time, it should be appreciated that in the event of a lack of liquidity, it will always take longer to execute the sales with the consequences that this action can generate among investors. How can it happen that you do not sell your shares at the prices you want. If not to the contrary, he is forced to cross an unwanted change at those moments. In practice, it can make a difference of many euros in operations and therefore it is not worth hiring them due to the many damages that it can create from now on.
As expected, it cannot be forgotten that these securities are highly speculative and are intended for other investment strategies in the stock market. With an obvious risk that your securities portfolio will devalue in the coming weeks or in a very few trading days, as is characteristic of these stock market proposals.
In bearish movements, it is evident that values are carried away by the inertia of the markets. Which in practice means that it is much more difficult to detect values that are in an uptrend or at least lateral. With which you can get a profitability around 10% profit in operations. Therefore, there will be no choice but to apply certain investment strategies. With the aim of improving the results of all our operations on the Stock Market in this scenario so little desired by small and medium investors.
Among the trading systems in the Stock Market there are some that can be more useful to satisfy our needs with the always complicated world of money. Thus, there are some guidelines for action that may be more profitable than others. Based on this scenario, we are going to propose some simple tricks to get the most out of the Stock Market in an adverse scenario for equity markets such as the one expected for the next few months.
The first standard of action should be to position yourself in values of clarity uptrend. Of course, there will be some despite the fact that falls in equity markets are widespread. Business possibilities are always present at all times, as investors with more experience in this type of operation know.
Another strategy is to opt for stocks that have a higher upside potential. Not all will show the same constants and with all certainty that there will be some other value, which for different reasons, has higher growth expectations. It is exactly these stocks that should make up our portfolio in the most difficult times for the equity markets. Where you can get benefits in operations as has happened in other downward movements of the Stock Market.
Another very useful system that we can apply from now on is the one that has to do with making new purchases for the same value. In other words, the commonly called buybacks and that they are used in periods that are destined to the medium and especially in the long term. With the primary objective of buying them at very low prices so that over the years they can make profits in operations. Among other reasons because the positioning of investors will be much higher than before. In practice, this means that you will have more shares and therefore more capital invested in the stock market.
