Here are five things to know before the stock market opens Monday. These are pre-planning techniques that are sure to help you survive the night or the day and still be in a position to strike at the right times and make the most of what you have been doing.
Do not make the mistake of believing that if the stock market has opened on Monday, that you have already won the game. You need to stay in the game, act as if you are yet to win and strategize on how to act based on your successes and not just a byproduct of them. For example, if you have been doing well in a stock market, do not leave yourself vulnerable to the inevitability of failure as a result of it.
Setting up a stock market stop loss is one of the most important things to know before the stock market opens Monday. In other words, instead of trying to ride the horse of momentum, instead, choose a precise price at which you want to take profits from your position. You can either do it at the end of the day or morning hours. Or you can keep the price determined until the moment when you feel the market is really starting to go down.
Keep your pocket money and any illiquid investments apart from your more solid stocks while the stock market is open. No stocks, no trade. It is always better to invest in the whole market than just a few select stocks that do not have any real risk attached to them.
The Real Reflection of the Market
Another important point to remember is that even though the stock market is open, you should not be too impressed with it. This is because the stock market is not a true reflection of the market. Do not underestimate the power of social media to affect your behavior and attitude.
When risk management is not strong enough, you need to take more risks to minimize risks. For example, you have chosen to invest in a small-cap stock, you will need to continue and hold the position for quite some time. At the same time, you need to avoid the temptation to jump right out when you see that the market has started to open and is moving down. Instead, keep the position until the market has opened and the price has fallen below the breakout point and hold it there.
The safest currency to hold in a position is USD. Also, bear in mind that if you want to protect your gains, you need to be in an open position and not in a closed position.
Last but not least, you need to ensure that you learn from the mistakes of your previous year. That means you need to review your stock market investing strategies every year. Even if the stock market is open, it will always be wise to review your previous years and learn from them to come up with a new and better plan for the year ahead.