Indonesia Expat
Business/Property

Investing in Turbulent Times

investment grade

Some investors fear turbulence. Others thrive on it. Even if you have zero experience in the securities markets, it’s easy to make a profit in a volatile economy.

The good thing about true volatility is that it can be predictable. When a company’s share price is tanking, for example, it could be a smart time to profit on a short sale. Just because the news for the company is bad doesn’t mean it has to be bad for you too, unless you already hold a lot of their shares in your portfolio.

How can everyday investors take advantage of roller-coaster swings in the securities exchanges? One way is to get involved in precious metals. Another is to swing trade shares of companies or sectors that you are familiar with. Others gravitate to foreign exchange (forex) so they can go long or short with equal ease. Finally, if you’re a political maven, you could discover opportunities in groundbreaking legislation, the kind that has the power to shake the entire economy. Here are some simple strategies for taking advantage of turbulent times.

Follow the Metal

Gold and silver respond quickly and significantly to economic uncertainty. Just follow the price of the precious metals for a few weeks and you’ll discover how they can whipsaw higher or lower on news headlines, government announcements, or international crises. For the millions of metalheads who deal in nothing but gold and silver, crisis is a good word because it means a potential upward or downward move in their favored commodity.

Swing It

Just before major economic announcements or presidential elections, some investors favor swing trading. There are dozens of variations on the theme, but swing trading usually refers to the holding of a commodity, stock, or another asset for one or more days in hopes of profiting on a relatively short-term price move. For example, if a corporation announces that it has a major new product in its pipeline, that could be a chance to buy in and wait for the formal unveiling. Tech companies are favorites for swing traders because they often signal their upcoming good news well in advance.

Forex Works Both Ways

One reason forex has become one of the most active markets for investors all over the world is simple in that you can go short or long with the click of your mouse. There’s no need for a margin account, or to wait for approval from a broker. Buying and selling currency pairs is a fast and easy way to speculate on the ups and downs of a country’s overall economy. Many forex enthusiasts get in and out in a hurry while others hold their positions for several days or weeks. Turbulence is a gift to forex investors because it means big price swings in relatively predictable directions.

Find the Volatile Sector

At any given time, there’s always at least one shaky market sector. Today it might be tech, tomorrow healthcare, and the next day manufacturing. Regardless, many professional and casual traders seek out these opportunities for potential profits. Often, entire sectors rise or fall based on government legislation, so it helps to keep an eye on politics and government news.

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