How to Leverage Market Volatility for Profitable Stock Trading?

Stock prices waver greatly. The rate at which stocks move in the market is referred to as volatility. While most traders escape their breath as soon as they hear the word volatility, there are traders who make money even amidst volatility.

In this article, we will explore the ways in which you could leverage volatility to make profitable gains in the market. Let’s get rolling.

Leveraging Market Volatility: 101

Let us have a look at the approaches with the help of which you could volatility in the stock market.

1. Stick To Your Objectives

Always remember the objective with which you entered the stock market. You should go into bucking the volatility trend only if trading is your primary purpose. Unruffling yourself is fine if you have entered the market as a long-term investor. You should act only when you are clear with your objectives.

Most traders go in for a stop-loss position and appropriately size their position to buck market volatility. During the phase of volatility, you could consider going in for relatively small trades and wider stoploss. This approach could help you keep your overall risk exposure almost the same.

Please note that it is possible to execute stop orders far from the stop price amid volatile market conditions. You can open one. If you do not have a demat account, opening one is now easier than ever. You could open free demat account on online platforms.

2. Sync Your Trades With The Market

There is no perfect stock or trend; the word is synchronisation. You should go in for trading stocks that are experiencing a trend that is in sync with the overall trend of the market. Trading stocks moving in sync with the market offers far more possibility of generating profits than other stocks. The key is to find the stock trending higher but has yet to reach the pace of its advance.

3. Short Term Strategies

Short term trading is the most preferred approach of the traders during volatile phases of the capital market. Short-term trading allows quicker than usual locking-in of profits. In short-term trading, you do not have to wait for the prices to cross the resistance level.

You just set a specific profit percentage for your stock and monitor the short-term price movements. You could begin by selling a part of your position in the first substantial profit-making opportunity and hold the remaining position to generate profits in the future. If you want to learn more about the approaches to buck the market trend of volatility, you could begin by reading authentic finance blogs.

Conclusion:

Stock markets around the globe are synonymous with volatility. The upward and downward movement of stock prices in a relatively short span of time adds to uncertainties. This article taught us that volatility is not necessarily synonymous with worry. There exist strategies you can use to make gains even amidst rising volatility in the market. In this article, we’ve learnt the approaches you could use to leverage stock market volatility to make gains.