What Happened with the Dow?
Over the past 3 days, the stock market has given up gains going back to November 1st. The S&P at one point yesterday was down 8% since its record high in January. While the markets are likely to rebound a bit in the near term, we just got a small glimpse of the damage that is possible and likely coming. The only question that matters… Can your accounts and retirement plan handle a major market decline and if not, what’s your plan?
Can We Expect Further Declines in the Market?
The markets plunged on relatively no news which means if and when we do get the next unexpected negative news, expect a much larger market decline. The fact that market prices declined to the lows that they did tells us there is little demand for stocks above those levels.
OTA Issued Warning Days Before the Plunge
On February 4th, Online Trading Academy issued a warning to members that a major market decline was likely. As seen on the charts below, following OTA’s patented core strategy we were able to determine that Supply greatly exceeded Demand in the S&P; major banks were heavy sellers at 2760 in the S&P. On Feb 5th, price rallies to our predetermined Supply level and the markets plunge from there. As you can see, knowing how to identify supply and demand on a price chart can help you protect your investments, even when the market plunges this dramatically.
A Retirement Savings Solution: Market Gains without Market Risk
Starting on the Wall Street side of the business, I learned exactly how Wall Street invests their own money which opened my eyes to simple yet powerful strategies. One that I utilize and teach our Online Trading Academy members is the Bond Strategy. The strategy offers stock market gains without any stock market risk to your investment capital. Instead of your investment capital sitting in the stock market with all the risk and fees, put it in one of three very safe, short maturity and high yielding bond funds. We then use the monthly interest payments to enter directional positions in the stock market. In other words, you’re able to take advantage of stock market gains without stock market risk. This is one of the many simple strategies Wall Street firms use for their capital, are you?
Participating in stock market gains without exposure to stock market risk is key for your retirement savings. Like anything in life, if you don’t take care of the risk, the risk will take care of you. Since 2000 through, this strategy has averaged an annual rate of return of just over 9%, while the S&P 500 index has averaged 3.2%. How can this be? Simple… you don’t participate in the losses. People don’t realize how devastating losses and down years are to their retirement savings or the true impact of having to make up those losses. It’s the single biggest risk to your nest egg and the most overlooked, until markets crash. This is why most people you know never enjoy the retirement they spent a lifetime dreaming of.
The Benefits of Market Timing
Have a simple rules-based strategy that helps you forecast major market turning points in advance, like we did above in the S&P and Dow. This allows you to both protect market gains and also profit from a down market.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Editors’ Picks
EUR/USD stabilizes near 1.0800 as trading action turns subdued
EUR/USD holds steady near 1.0800 on Thursday and remains on track to end the day in negative territory following upbeat macroeconomic data releases from the US. The action in financial markets turn subdued as trading volumes thin out heading into Easter holiday.
GBP/USD extends sideways grind above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth help the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
Discover how to make money in forex is easy if you know how the bankers trade!
5 Forex News Events You Need To Know
In the fast moving world of currency markets, it is extremely important for new traders to know the list of important forex news...
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and...
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.