With all the commotions and noises in the market. We have fear spreading across the world with supply chain issues, political issue (Debt Limit & Infrastructure Bill being passed) and etc. Outer region like China, like Evergrande on the verge of collapsing due to over leverage of debt.
How will the market react?
My analysis:
I see fear-mongering as a short term impact to the economy, as investors and traders are afraid of the economy tanking due to many reasons. As a result, we see some panic sellers taking out their position to prepare for the downside. However, do we really know when is the time of a reversal or even the continuation of a bull run.
My method:
1. I tend to be a contrarian trader, when most news strike fears, I would set a long position with a nice entry on futures. 2. Risk management with Stop loss or Mental Stop loss. 3. Will add small positions on a huge drop, and sizeable positions on a rebound up.
Conclusion:
We never know when is the time the market crashes, so just use risk management to ensure your portfolio will not get impacted significantly.
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