When you’re an active stock trader like me, your adrenaline level is always high. I prime myself up in the morning. I begin by reviewing the market outlook for the day. Before a session begins, I already have a fairly good idea on how trading will take shape. Every trader hopes to execute winning trades and end each session on a positive note.
From my years of experience in the stock market, I’ve come to understand its behavior. Although my objective is to make money, I don’t win in every trade but my high win percentage is the envy of many. When the market environment turns sour, I take ‘stock’ of the situation and make sure that I maintain my winning edge.
A sudden market reversal
Market analysts predicted that the Philippine stock market can expect an unprecedented growth in 2018. In truth, the PSE posted fresh records in 2017 and continued the upward trend when the year began. Just as investors’ optimism is reaching fever pitch, Philippine stocks fell to its lowest by mid-April.
For the past week, many investors erased gains and accumulated losses. External factors such as peso devaluation, inflation rates, political undercurrents, and global trade tensions are increasingly disrupting the local stock market.
The once optimistic view suddenly turns into a dire scenario. The Philippine stock exchange shaved off more than $20 billion in market value. It can’t be denied that the current circumstances are upsetting for stock traders. A vibrant stock market is our bread and butter. But now, my earning potential is threatened. I need to deal with the situation.
5 ways to bear a stock market downturn
I feel disappointed when the market is slow but not totally distressed. It’s a temporary setback. These are the times I have to be resilient in the same way the Philippine stock market is. Our stock market went through turbulent periods before and came back stronger. As a trader, I just have to ride it out and prepare for the eventual recovery.
How to endure a stock market downturn
1. Welcome the break
Instead of gloating over my situation, I’d rather assume a positive disposition. Frankly, I wouldn’t find an excuse to take a respite had the market continued its advance.
Thus, I welcome this break. It would do me more good than harm. Many would view it differently. I’ve built up a fairly substantial amount of savings from stock trading so it’s time to reward myself.
It’s not always sunny in the stock market, torrential rains will fall too.
2. Time to recharge
In my profession, we live to trade but the toxic day-to-day activities can take its toll. It affects your physical and mental state. It’s only now in a depressed market that I’ve come to realize I need to recharge.
I need to shut myself off from the market and look after my overall well-being. After a long time, I finally took a well-deserved vacation. I went to places where I can enjoy and be myself. Bask under the sun, smell the fresh air, and simply relax.. like my recent trip to Thailand.
That vacation helped me relieve stress and rejuvenate my emotional, mental, and physical condition. There’s more to life than stock trading. Suddenly, I feel more energized after re-booting my system. I’m glad I did.
A successful stock trader can only go as far as his mental faculties and physical conditioning could bring him.
3. Time to refocus
A hands-on trader would always accept the stark realities of the stock market. The market goes through spikes and dips. I’ve learned to apply the fundamental approach and studied charts and patterns using technical analysis.
But sometimes, when you’ve developed a habit, you tend to stick to it. The market downturn is an excellent opportunity to refocus. I consider myself as an astute trader but humble enough to admit there’s plenty of room for improvement.
I conduct a personal self-assessment. I carefully analyze the things I do that spell success while looking at my weaknesses.
It would be wise to review your strategies and polish your craft while the market is down. Insisting on trading while the market is down will only double the pressure and lead to losses.
4. Finding the perfect timing
You need to have the trading experience just like me to accurately read the market movements. Newbies or greenhorn traders are not advised to trade in a slow market without expert supervision.
A perceptive trader would know the perfect timing when to return and resume trading. I believe I already have an excellent grasp of the market. My best comes out in challenging situations. I’ve developed my own trading style from years of learning and hands-on experience. The results speak for itself.
Every trader has his own trading style and technique that were inspired by or learned from other stock market traders. You can adopt a mentor’s style at first until you develop your own.
5. Keep the composure
I know that when the stock market is down, my performance is affected. I am as eager as the other traders to make profits. However, a proficient trader needs to maintain composure in order to make sound judgment.
That is the reason why I have an excellent record in preserving capital and mitigating risks. Clients can rely on my expertise. I don’t let emotions rule my trading even if the prospect of losing money is an emotional matter. The downturn is characteristic of the market and the opposite of a booming one.
The stock market will have peaks and valleys influenced by events not related to fundamentals. A good trader is measured by his ability to maintain calm and adjust accordingly.
Waiting for the recovery
During my earlier trading days, I’ve kept to the age-old stock market wisdom. Buy when the market is declining or sell when the market is on an uptrend. In reality, executing both is not a piece of cake.
It takes learning and confidence building. Over the years, I’ve gained the knowledge and self-confidence to trade in good and bad times. Under the present scenario, I just have to stay in the market and wait patiently for the recovery. It will come sooner than later. But whenever I trade, I always stick to one principle: losing is not an option.
John Edward Yu