EP 008: 6 things traders can do when the stock market is crashing
The market has been dropping substantially and many people are really worried and fearful. The Dow has fallen by 1,911pts in just 2 days, which is insane. Many people think that a market crisis is coming soon. It’s too soon to conclude yet, but true enough, if the market continues to fall, we are getting nearer and nearer to a market crisis.
In this episode we are going to look into 6 things that traders can do when the stock market is crashing.
Some of the things involve shorting, a.k.a short-selling. Shorting means, you’re selling high and buying low. Which means, you’re bearish to the security. You sell first, and then buy back later at a lower price. This can be done in most markets, just that the mechanism behind may be a different across different instruments or countries.
In the episode, we also talk about the bull versus the bear in major indicies. We use Dow Jones as the example.
The chart above is the weekly chart of Dow Jones since 1995. We can easily see that bull runs are generally longer than correction or crash.
Here’s the short list of Inverse ETF mentioned in the podcast.
S&P 500 Inverse ETFs: SH, SDS, SPXU.
Nasdaq Inverse ETFs: PSQ, QID, SQQQ.
Dow Jones Inverse ETFs: DOG, DXD, SDOW.
What you’ll discover in this episode:
- Knowing whether the market is crashing or just a correction
- If the market is crashing, what traders can do
- 5 ways to profit from bear markets and 1 way to protect yourself
- Finviz.com (Free screener mentioned in this episode)
- Book: How to Make Money in Stocks: A Winning System In Good Times And Bad, Fourth Edition by William O’Neil (Amazon affiliate link)
- Book: Trend Following, 5th Edition: How to Make a Fortune in Bull, Bear and Black Swan Markets by Michael Covel (Amazon affiliate link)