5 steps to deal with market volatility
By Kirsten Hastings, 7 Feb 18
With low volatility having been the norm for nearly three years, the sharp drop experienced by global markets earlier this week awakened some fight or flight responses. AJ Bell offers five lessons to help investors cope with market volatility.
“Stories of US private investors finding themselves unable to trade when they wanted, or at all, on Monday 5 February, were no surprise, as markets can and do seize up when put under duress.
“This is a timely reminder of the dangers of relying on the trappy combination of timing the market and using market liquidity to do so.
“Liquidity is not just being able to buy and sell at the click of a mouse or swipe of a finger. It is about being able to buy or sell what you want, when you want and – most importantly – in the volume you want and at the price you want.
“There will usually be a bid but in a falling market if may be lower than you want or need, so assuming you can always get what you want could prove dangerous.”
Tags: AJ Bell | Investment Strategy | Volatility
