SWINGING MARKETS

As you get more exposure to the world of stock trading (and it is its own little world) you'll have a better understanding of what's going on around you and how certain things can affect the markets. I've been involved in varying degrees in the markets for almost 20 years now and things still suprise me. Lately I've seen a lot of movements that really seem counter intuitive, confounding me and many of the so called experts.  I have to say since the GFC many of the logical rules of trading have gone right out the window, never more so than the last couple of years where I've seen some massive swings in the market for virtually no reason (except maybe for market manipulation and computer generated trades)

Infact I will say I've NEVER seen the market so constantly swing around like this. this makes it really hard for anyone on borrowed money (either margin lending or CFDs) to hold their positions without getting sold out.

If you're buying shares outright you really don't have too much to worry about in this situation.... just keep holding on to your shares till they bounce back to a point where you can sell them (hopefully at a tidy profit). With the huge swings we've been having you might find there are plenty more profit taking/buying  opportunities if your timing is good

If you're on borrowed money you really NEED to do the calculations and figure out how big the swings in your particular feild have been and whether or not you can hang on to them if (and when)  those swings occur again. Again because I trade on the Australian market I look at the ASX200 as my purchase of choice and need to either be able to loose the positions I have in the even of a big swing going against me or hold on them (this year the ASX200 which is what I buy and sell routinely swung by 1300 points from top to bottom of the cycle. Outside of the major crash which sparked off the GFC I've never seen that happen. I would have to ask myself "Is it worth trading to a 1300 point (20%) swing?" The capital requirements for that would be exponentially larger than trading to  say a 600 point swing.

For the most part there's no real right or wrong answer for this but as long as you're aware of the risks and capital requirements for each scenario and most importantly you're not playing with money you can't afford to loose, I would say its always worth the effort and time


NOW FOLKS STAY TUNED VERY SHORTLY I'LL BE DETAILING MY TRADING STRATEGY WHICH ALLOWS ME TO LIVE OFF THE SHARE MARKET :)