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If you’ve been following the stock market recently, you’ll have noticed something: things are a little crazy. Mainly this has to do with the fact that nobody knows how to price companies when there’s a global pandemic raging. Politicians could decide to shut down the economy at any time, crippling companies and preventing them from making profits.
The craziness of the stock market is likely to continue for some time too. Investors aren’t sure how the data are going to turn out on the economy. And so people are just guessing what will happen in the future. We’ve never seen such deep demand and supply shocks in the economy before at the same time. And so it is unclear how it will recover in the weeks and months ahead. Every time the market gets a bit of news from official record-keeping agencies, it jumps. So far, we’ve had some excellent news on job creation, with losses lower than people expected. But whether that will continue isn’t clear.
Volatility in stocks is actually good news for savers who want to make a lot of money quickly. Giant swings up and down are indications that a lot of people are making a lot of money (while others are losing it). Therefore, being able to take advantage of these gyrations is a unique opportunity to expand the value of your investment portfolio.
Taking Advantage Of Stock Price Movements
Knowing where the stock market will go next is the tricky part. You have to somehow get inside other investors’ heads, understand what they’re thinking, and then play your hand according to a complicated game. It’s not easy. And it’s why most retail investors get burned. Until recently, it was the only real way to make money in stocks in the short term. You took a punt on what you thought other market participants were going to do and acted on it.
Now, though, there’s another approach. Targets Trader Pro calls it “algorithmic trading,” and the idea is pretty simple. Instead of relying on your insights and timing, you let the software do it more accurately. You enter a few relevant parameters, and then it’ll execute trades according to your orders.
How this develops could be very interesting. We know that machine learning will probably improve trader returns in the stock market. So regular investors, like you, could eventually just farm out the task of buying and selling stocks to a robot. It would then look for patterns in the data and make trades according to where it thinks the highest returns lie. The technology wouldn’t have any intuition – it would have to rely on past data. But even so, it could seek out any remaining inefficiencies in pricing and exploit them.
Stock price movements are, therefore, an opportunity. It can be a bit of a white-knuckle ride of you have a diversified portfolio, but it can also be a lot of fun making money from the panic of other investors.
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