This was very evident in the recent decline in the market. When the market was going down, the crowd was selling at any price, causing the stock market to crash.

Stock Market Strategy Trade stocks in a stock market crash


One of the most interesting things about the stock market is watching people trade stocks and engage in crowd behavior.

This was very evident in the recent decline in the market. When the market was going down, the crowd was selling at any price, causing the stock market to crash.

In the media, at the same time, all voices were discussing selling, selling, and selling in a united chorus.

As you can see from the market movement, the herd suddenly burst, almost without warning, into a 13% drop in the market in just five weeks until the end and even then extreme volatility prevailed.

What should be your stock trading strategy?

Market making

Imagine that you are a professional stock trader, market maker. You have a certain amount of capital. If you are full of inventory and do not expect a stock market crash like the one that just happened, then you are doomed to failure.

If you have, say, a million dollars in stock, to pick a round number, and you are tall at 80%, if the market is down by 15%, you are losing an average of $ 120,000 in a matter of weeks. If you have to pay off your losses, you are not a happy professional in stock trading.

On the other hand, if your net worth is 50%, you've earned $ 75,000 in just a few weeks.


You see, being a market maker, you will learn to either expect and benefit from the crowd, or you will find yourself serving a clip-liver as an employee of a delicatessen store on Wall Street in no time. Drifting with the crowd is a sure ticket to ready-to-eat foods.

I've never had an average of 300% gain per year on my trades through slow learning. If I'm wrong, the market is kicking my ass hard. So you quickly learn to develop correct reflexes.

Now here comes the hard part for any stock market trading as a market maker - when to load, when is the low, when to drop off, when is the top?

You don't want to go up in front of the moving train and buy on the way off. You don't want to be a leader when the stock market crash seems to have stopped, only to find out that the market has more downs.

The way to do this is simply anticipating. You have to be short before descending, long before going up.

The only way you can implement your own stock trading strategy is to be able to ignore all crowd mentality, all herd instinct. If you see everyone is bullish, you should be bearish and looking to lighten and sell. If you see everyone selling in the stock market crash, you need to start looking at the point of purchase.

It is the ability to maintain a clear mind and observe others rather than being swept away by them or with them that pays off.

Stock market experts


See Warren Buffett's purchase of Bank of America as the poster boy for the recent stock market crash. Nothing but bad news in the BOA.

Look at the smart hedge fund managers who cut short the mortgage business before it turned out to be a bubble.

These people had the courage of their minds and the ability to act in a challenge, in fact, a confrontation with the crowd.

Remember, we are not standing in front of the raging crowd in the stock market crash - very dangerous - but are waiting for them to make the mistake of over-selling in the market. When this market shows signs of turning, we will be looking to buy.

When there is a bubble, we look to a palace.

This is why the simple strategy of being paradoxical works for some money managers.

However, there is more to it than that, and greater potential for big profits. You should trade with the trend but anticipate, control trends and market momentum, and look to get the right price.

Remember that she is alone. On one of my best calls, I had my clients mostly cash and stopped buying after the market peaked in August 1987. The day after the October crash, I called them and issued a tumultuous buy recommendation as it seemed to me that panic might wear out itself. We have reached the lowest level. Few of them can muster the courage or money to buy, but those who have never seen low prices again. Buyers were scarce and people giving purchase recommendations were even rarer, but this is a good time to buy.

Are you starting to see that you need an independent mind and the courage of your convictions to win the stock market?

Bear markets


Another remark. The best stocks I found were in the bear markets. True, you can buy almost anything in a bull market and go up, but the highest payoffs in my book have been in bad markets. Markets are not terrible, markets are bad. I never understood why.

Stock Market Press

I would like to warn you about the stock exchange media. Commentators are sharp but the general appearance in the media is only a reflection of the public's thinking. If the market is rallying, the news presented is optimistic. If there is a crash in the stock market, there will be no good news. They seem to focus on the current trend but we should expect in our stock market trading, as a strategic issue for the stock market.

Yes, it is a good idea to know the current trend but only because this is the platform, and the starting point, that you expect from.

If there is a crash in the stock market, you expect to change, and you anticipate the turning point. If there is a bubble, you expect that bubble to burst.

So you have to know where you are right now, but always looking for your destination in the future, then you can put yourself where you want to be.

There is a general trend in hedge fund and portfolio managers to trade in the last three months of the market. If the market is up, they want to buy. If the market is low, they want to sell and sell. This is the way to go bankrupt.