Your thoughts on this?
@che2on Thanks for sharing the link.
It is too early to start thinking of investing at this point as we are not sure how long this pandemic would last.
But is worth to understand the previous market crashes, the time it took to crash and the time it took to recover.
An article published in Forbes has some data to watch out for.
1929 Great Depression - took 34 months to fall by 89% and 25 years to recover.
2008 Recession - took 16 months to correct by 50% and 4 years to recover.
In the current scenario, it’s just been two months and the correction is about 33%. We would not know how long this correction would be both in terms of impact and the time it would take.
But, the dynamics of the market have changed, the time it is taking to either fall or rise is decreasing. Hence, it becomes important to identify the right tools and techniques which would help us better position ourselves in these changing market dynamics.
How do we time our entry in stocks as we are not sure, how much it would correct?
At this point, technical analysis can play an important role.
Below weekly chart of Nifty 50 Index with 100 days EMA.
EMA lines have acted as a support for the markets and also, helps identify the direction of the market.
There are various such technical indicators which can be used in determining which stocks to invest in and at what point. It is important to backtest your strategy and factor in, the change in market conditions.
The above opinion is from an investment perspective and not from a trading perspective. Both have different mindsets and requirements.
Volatility is the best friend of traders as mostly trading involves taking positions for a short duration of time ranging from few minutes to a few weeks and not holding on to it for long.