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Can you keep your cool during times of trading panic and survive in extreme volatility? And why does it matter to stay calm and rational in moments like this?
As much as we like to consider ourselves as logical and composed, our emotional state is a significant driver in our behaviour.
Even when the situation is less dramatic, the vast majority of traders may feel out of control emotionally and end up trading either under the pressure of trading or with over-confidence.
No matter how much trading expertise a trader has or how hard we are working to win, we usually neglect the impact of emotions. Even experienced traders can get under anxiety’s influence at times.
The ideal is to trade with confidence without letting negative emotions (or wishful thinking) get in your way. But, of course, easier said than done, right?
Here are some tips to help you stay cold-hearted in the heart of the moment.Being aware of your emotions and what triggers them is the first step in building emotional intelligence. When you know how you’re feeling and understand how those feelings influence how you view risk, you will realise that you can control them.
Your ability to find inner balance will help you make sound decisions and manage your mind during market turbulence. All in all, sensible trading can happen only if you can control your feelings.
When you get caught up in a trading storm, one approach is to escape the situation. Take some time away from the market, grab some coffee, walk your dog, cook a quick meal. Get off the emotional rollercoaster and come back with a clear mind and fresh perspective. A clear mind is always a more rational mind.
All the above tips are to be followed in the middle of a trading crisis. But, what about precaution? Instead of finding ways to keep your head cool in times of stress, you can just take the situation in stride by doing or avoiding some things.
Don’t force trades: Forcing trades is a way to act emotionally because it usually involves making up for previous losses. Unfortunately, experience has shown that if you start to make trade forcing a habit, you’ll definitely end up with losses. Do not just trade for the sake of trading: Be patient, do your research, prepare your strategy, and evaluate your trading priorities.
Don’t get overconfident: Overconfidence may lead to problems. Being in a euphoric state clouds judgment and may sabotage performance. Trading with overconfidence usually contributes to higher trading frequency. The more trading an investor does, the less likely they are to succeed.
Keep a trading journal: It is helpful to revisit your past gains and losses and evaluate them without having negative emotions. Keeping records of your trades, the reasons for entering into them, and knowing how they performed can help you learn from trading. In addition, reviewing your past strategies can help you not lose composure when you have a hot run.
Being organised and systematic: Creating a trading environment and building trading habits will allow your mind to curb emotions when they seem to be out of control.
Considering altering your trading style: Finding your trading style is not easy to achieve, and once you find it, you must be consistent. But, in volatile markets or during times of trading stress, you must be flexible. Narrowing or changing your trading basket or tightening up holding periods of your trades may benefit you in the long run.
SPAC is short for ‘special purpose acquisition company'. These companies are backed by high-profile investors or are affiliated with celebs to help attract attention. Jay-Z Carter, Shaquille O'Neal, Leonardo DiCaprio, Donald Trump, Serena Williams are a few to name. Regardless of their minimal investing experience, celebrities have helped popularise such once-obscure investments.To get more news about eurotrader, you can visit wikifx.com official website.
This preferred method of taking companies public means faster execution, lower costs, and narrower regulatory oversight for the investors. For the rich and recognised, it's a new way to flex their status and wealth and monetise their reputation.
SPACs have been around in their current form since the 1990s, but they were previously associated with frauds and scams. Now, SPACs are considered to be really quite cool, especially after having taken off during the pandemic.
How does a SPAC work?
Rather than go public through its own IPO, a private company opts to debut on stock exchanges via a SPAC. A SPAC raises capital through an Initial Public Offering (IPO) to acquire an existing operating company.
A SPAC, also known as a "blank check company", is an entity with no commercial operations, existing specifically to complete an IPO to take an acquired company public.
Before the SPAC has bought a company, its funds are typically invested in government bonds.
Investors who support a SPAC in its pre-IPO stage are called sponsors. The sponsors typically have two years to identify acquisitions or return their investors' money.
Investors who want to gain exposure to startups in red-hot sectors love SPACs. The key to benefitting from such an acquisition as an investor is putting money into the shell company while still searching for a deal. In the States, 59 SPACs were formed in 2019. In 2020, that number rose to 248, while 2021 saw 613 SPAC listings.
In 2021, 21 out of 33 celebrity-tied SPACs have posted negative returns. Many SPACs lose money after finding a company to acquire, especially in the year following a merger.
The regulatory authorities caution investors about putting money into special purpose acquisition companies associated with celebrities.
However, a handful of SPACs performed really well over the last two years. Several notable companies went public through SPACs, including Virgin Galactic, DraftKings Inc, Iridium Communications Inc and MP Materials Corp.
SPACs tend to be risky investments, so they're generally inappropriate for conservative investors.
A blank-check company has no operations, no debt, no liabilities and almost no assets. Thus it takes less time - 3 to 6 months - to complete the regulatory steps involved with an IPO process - 12-18 months. Also, the advisory fees and the legal costs are significantly lower than those charged for traditional IPOs.
However, the main challenge of going public with a SPAC merger over an IPO is that the SPAC process does not require the rigorous due diligence of a traditional IPO. This could lead to incorrectly valued businesses resulting from well-hidden weaknesses of a company.
¿Es buena idea operar por ejemplo en Semana Santa, en los días festivos y que abre la bolsa o el Lunes Santo operar en otros mercados que están abiertos?
Si me preguntan a mí la respuesta que les voy a dar es NO. No pretendo ser demagógico, ni populista, ni aplicar la psicología inversa.
Aplicando en sentido común, es decir, ese que es el menos común de todos los sentidos, ¿ que necesidad hay de operar, cuando el mercado tiene menos volúmenes y cuando los grandes traders y/o brokers están de “vacaciones”?.
Algunos de ustedes pueden decirme: “pues por eso mismo creo o considero que es una buena idea operar menos volúmenes, mayores oportunidades para la volatilidad etc”…
Pues debido a estas respuestas he buceado por la red y sacado conclusiones que avalen mi teoría de que la Semana Santa no es propicia para operar.
A continuación, les mostraré una tabla sobre el comportamiento del S&P 500 en Semana Santa que creo que me va a dar la razón.Por lo tanto, estudiando los 3 días previos al Viernes Santo y los tres siguientes, se llegan a unas conclusiones bastante interesantes. No. observamos unas rentabilidades interesantes y si les sirve de ayuda también decirles que los lunes después de la Semana Santa han resultado ser unos días desastrosos. Sólo el 37% de los lunes después de Semana Santa han sido positivos en Wall Street.
La Bolsa española cuenta con muy pocos festivos. No cierra en la mayoría de los días festivos nacionales, pero en el caso de la Semana Santa, la cosa cambia. Las bolsas europeas y americanas también se suman al cierre, aunque con algunas diferencias.
Así, el mercado español cerrará Viernes Santo y Lunes de Pascua, momento en el que no se podrá invertir en bolsa. Habrá que esperar hasta el martes, 14 de abril, para volver a la normalidad. Este cierre supone la clausura de La Bolsa durante 4 jornadas seguidas, el momento del año en el que muchos traders o brokers siempre han aprovechado para irse de vacaciones (algo complicado en el actual contexto sanitario).
El mercado sí que abrirá en su horario habitual, con total normalidad, en la jornada de Jueves Santo día que además no es festivo en varias comunidades autónomas, como en Cataluña. Este día también abrirá con normalidad la bolsa más importante del mundo, Wall Street, parqué neoyorquino que sí cerrará en Viernes Santo, pero no el Lunes de Pascua, abriendo con total normalidad.
El resto de los días de la Semana Santa (los mercados abren con normalidad, aunque el volumen de negocio será sensiblemente más bajo y los movimientos más estrechos).
Por lo tanto, mi conclusión es: descansen, disfruten de la familia o de la soledad y no utilicen el pretexto de que tienen que cuidar e invertir en Semana Santa para no ir a algún centro comercial o algún otro sitio que no les apetezca. Utilicen el COVID como pretexto. Será más vendible y acertado que invertir en estas fechas.