Make Market Volatility Work for You!
Editor’s Note: As we officially move into the holiday season, the markets have brought us a special gift: increased volatility. If you know how to play it, volatility could actually help you pad your trading returns. But if you don’t know how to play it, volatility could bleed you dry. To ensure you’re part of the profitable group, here’s a quick article that explains why trading IS NOT the same as gambling – which is very applicable right about now.
Whenever the markets enter a period of heightened volatility, I hear unseasoned traders saying the same thing…
“Trading is just like gambling.”
Well, guess what? That’s flat-out false.
So today, I’d like to take a moment and repost an article I wrote about “panic periods.”
These are volatile periods in the stock market that can lead to gut-wrenching losses for typical buy-and-hold investors… but could be cash machines for those who follow my real-time trading advice inside The War Room.
So let’s make this crystal clear right from the beginning…
Market volatility is here to stay.
Case in point, if you look at the S&P 500’s single-day moves over the last 40 years, you’ll see that 16 of the 20 biggest moves came in the last two years.
So what does this mean for you?
It’s time to embrace volatility – and learn how to use it to your advantage.
Let’s go through an example… which clearly illustrates why the “trading is like gambling” analogy does not hold up.
Let’s start with a gambling scenario…
Say you bet on the Chicago Bears, who are favored by seven points. The line is Bears -7.
Now let’s pretend that at halftime, the Bears are ahead 14-0 over the Packers. You’re winning the bet. At the end of the third quarter, you’re still winning, with the Bears ahead 14-3.
Here’s the key: At this point, can you go to the casino or sports book and take your money off the table?
Nope! Your bet doesn’t go final until the game is over.
And that’s the problem…
Say the Bears (in typical Chicago sports fashion) switch to a prevent defense and let the Packers pad their stats with a touchdown, which makes the final score Bears 14, Packers 10.
Guess what? The Bears won the game – but you lost your bet.
And that’s a 100% loss.
But here’s the key difference…
With trading, you can sell anytime!
If you’re in a winning trade, you can take your profits at noon.
Or maybe you decide to take your profits an hour before the close.
In other words, when you’re trading, you don’t have to wait until the game ends to
collect your profits.
You can mitigate your risk.
That’s why trading is far superior to gambling – and why the gambling analogy doesn’t hold up.
In periods of heightened market volatility, this is a critical difference that you need to be aware of. It could mean the difference between winning and losing – day after day.
Action Plan: Inside The War Room, I’ve been using a “protective” stock that tends to always go UP whenever market volatility increases. It’s led to a series of intraday winners – even while the markets were red – which offers you superior protection on big sell-off days. In fact, while most investors were crying this week about the intraday sell-offs, we rang the register on four separate trades. If you’re interested in turning volatility into profits, then you’re invited to join us inside The War Room. To sweeten the deal, I’ll even guarantee that you’ll see 300 winners this next year. Think I’m kidding? See this incredible guarantee for yourself RIGHT HERE.