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Rumor and rumors of rumors finally took over common sense and fear was at a premium. The VIX soared to a four year high as "sell stocks and ask questions later" became the mood for the day.
Rumors about a French credit downgrade and the health of some French banks created a selling frenzy. Forget that all those rumors were denied by all major reporting agencies, when traders are blinded by fear they might believe almost anything. When people trade irrationally there can be some marvelous opportunities for those that keep a calm head and a keen eye. The best way to combat fear is to have a plan that seeks to find moves that are overdone based on reality and to doggedly control your risk.
If you have a solid plan that you stick to then fear goes away and you can take advantage of what the market brings you. Jimmy Piersall was crazy and he has papers to prove it and I may be crazy(not endorsed by any rating agency) but as bad as things are (and they are bad) they are not as nearly as bad as yesterday's market action would have you believe. Now I'll admit that some fear was totally justified especially last week but now for many stocks and some commodities, it is getting a little bit silly. I am not calling a stock market bottom necessarily, but at the same time a lot of stocks are ridiculously oversold due to fear and the loss of any rational thinking. When you trade by fear you will make bad decisions.
Fear strikes out and so will you.
The best way to combat fear is to have a plan which includes taking your losses if necessary only so you will have the capital to take advantage of the values that those driven by fear will give you. If volatility is too much for you, stay on the sidelines because if you had a good plan you should be out and you can then wait for...........
THE SUN TO RISE AGAIN.
Every comment, every upvote, every support is really appreciated.
Thanks For Reading,
@lordoftruth
If you missed to read my
previous posts from the series of Forex Education Center
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