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Friday, February 23, 2024

ANATOMY OF STOCK MARKET CRASHES

My study of stock market crashes found that most of them share a number of common characteristics. This article describes some of these attributes.

Suddenly


Crashes do not give prior warning before they occur. If Börsencrash 2022 crashes could be predicted with any degree of reliability, then there would never be crashes. Stock market crashes end just as suddenly as they began. I’m aware that there are some people who try to predict crashes, but my personal opinion is that your energy is better spent on other things.

Sharp


Take a look at a diagram of a crash and it would be obvious to you that one distinguishing feature of the crash action is its sharpness. The crash looks like the edge of a cliff and is actually just as dangerous. The sharp falls of market crashes are compounded by a massive imbalance between buyers and sellers. Basically everyone is heading towards the exit at the same time.

Relentless


Normal market movements are characterized by trend movements interrupted by trend retracements. In fact, the Elliot Wave theory is based precisely on this phenomenon. However, during a crash, price action is generally one-way – down, with very little upside retracement. It’s this feature that makes crashes so bad for the wallet.

Statistically extreme


If you draw a bell curve of daily price changes, a crash lies on the far left of the curve and is what statisticians call an outlier. This is why crashes are such rare occurrences. Despite their rarity, smart investors are always prepared for a crash. One way to do this is by using position sizing techniques that limit the amount of investment capital you risk.

Across the border


If there’s a crash, expect 99% of stocks to bleed red. There will be few, if any, survivors. Market makers note everything, whether justified or not, so that even fundamentally sound stocks are not spared.

There are few market events as traumatic as a stock market crash. Any time you see a sudden, sharp, unrelenting, and statistically extreme downward market move, chances are you’re in for a crash. In fact, you’ll be very lucky if any of the stocks in your portfolio come out unscathed.

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Overcome the stock market crash

Well, you’ve read in the papers how the stock market crash robbed Wall Street workers of their sleep. Before economists find a solution to this local crisis, they try to understand the reason for this recession. There are some who have predicted this would happen unless countries reassess their economic policies, people like Paul Krugman who finally got a chance to have the final say. For the common man, a rise or fall in the stock market will necessarily be reflected in his ability to bring home his twice-daily meal, his ability to support his job and his family. In order to do these things, you have to watch the stock charts closely and understand whether or not the market is going to crash.

Beat the stock market crash

Surviving the stock market crash is not a difficult task when you can analyze a market and tell whether it is stable or not. Economists tend to use the term bear market for a weak market. During this bear market, many people invest in stocks hoping that prices will rise and the market will become strong enough to be called a bull market. During this period, it is recommended to invest in mutual funds. This is the safest part of the investment cycle as the market is quite stable at this stage and good profits can be made. I encourage you to enter this part of the investment cycle as it is the safest part of the stock market

Beating the stock market crash is easy as pie if you know the right precautionary measures and follow them in time.

Get rid of all your debts. Pay off all of your loans and all of your outstanding loans, and try to pay off your mortgage slowly if possible. If you have the least amount of debt on hand when the stock market crashes, you will be the least affected

If a collapse occurs most banks would be useless and it is advisable that you withdraw all your money from the bank account. The more cash you have with you, the better off you will be. Keeping your money banks at this moment of crisis is a totally bad idea . Invest in gold, silver and platinum or bullion as these things have always stood the test of time. You can fall back on this converted fortune in the event of a fright to free yourself from an impending danger. It is always one of the best methods to beat the stock market crash.

Stress factor and panic nature

Try to put your stress factor and panicky nature aside. You must have a very stable mind when considering which stocks of companies would be your best buys. First, examine the company’s financial statements and find out which company is profit-oriented and result-oriented. Try Börsencrash 2022 to orient yourself by the company’s position in the market, by its history in market crashes. Sticking with a giant MNC is a safe bet, but not always the safest since we’ve seen what happened to the Lehman brothers. Consult reputable stockbrokers and trading analysts to assess the situation. Keep an eye on the stock charts and the columns of major economists in the newspapers. They just don’t know what knowledge might just prove useful enough to beat the stock market crash.

Ahsan Khan
Ahsan Khan
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