Stock market trading is an art of learning, understanding the market, and making needful investment decisions. If you are confident about your market portfolio, you need not have to worry about volatile markets affecting your portfolio negatively. If the volatility can affect your portfolio, then it becomes a risk. To mitigate the same, you should keep in mind certain factors that can increase the sustainability of your portfolio.
The first and foremost advice one should follow is to diversify your portfolio in various types of stocks such as growth stocks, blue-chip stocks, defensive stocks, penny stocks, commodities such as metal, oil, rubber. You can also invest in other schemes such as fixed deposits, SIP (systematic investment plan), mutual funds, ULIPs to create a balance between growth (high risk) assets and defensive (low risk) assets to protect you from volatile markets.
Understand how much risk and loss you can withstand investing. If you have invested before, keep track of your investments. This will ensure that you won’t incur losses and help you do necessary portfolio corrections, which will negate the impact of volatile markets.
You should always keep your personal wealth and portfolio wealth separate, as the collapse of the portfolio can trigger your emergency funds. It is prudent to keep your liquid assets on the go and the stock market portfolio separate. This will also help you be calm in volatile situations and prevent you from making rash decisions that may be taken emotionally and in panicked situations.
After you are confident that your portfolio is diversified, you can have a different emergency asset other than your portfolio to withstand any risk. You can gain from the volatile market by hedging in the same and profiting through it. You can deploy various strategies such as investing in trending stocks that swing in the intraday market, learning the candlestick chart, and understanding when a breakout of the stock may happen while placing a stop loss to avoid mistakes that may result in huge losses. Keep in mind what percentage of profit you wish to gain through this trading. Once you have achieved the profit, exit the trade without risking your portfolio any further.
Thus, in summary, having a solid investment strategy in stock market trading requires meticulous research and patience, and risk tolerance. You can predetermine these volatile markets by keeping track of news that can easily create a ripple in the market. Create a defensive portfolio to withstand the same, and then trade the trending stock while keeping a stop loss to make profits even in bear market conditions.