A Note on Volatile Markets

If markets weren’t volatile, we wouldn’t have anything to worry about, now would we? But it isn’t so, and market volatility is a reality that we have to deal with.

Of course, it becomes very easy for people to doubt their investment strategies as the market fluctuates over the short term, and pull out, yet it is important to remember that while it is sometimes a good idea to think long-term and ignore the short-term fluctuations, it is important to base your strategy after doing your homework about the companies that you have made investments in.

It’s important to remember that making trades during this time or even sticking the buy-and-hold strategy are both suitable, and this depends on the circumstances that you find yourself in.

Since market volatility is characterized by heavy trading and wide price fluctuations, it often occurs due to an imbalance in financial transactions that are occurring (for example, all sells and no buying) and this happens for a number of reasons.

Company news, an initial public offering, unexpected earning results, recommendations from a popular analyst among several others is why volatility becomes the trend even if only for a short while.

Another popular option about why market volatility occurs is due to psychological impact that some events have on investors, and as a result of their actions, market volatility occurs.

But the real reason for market volatility to occur is not necessarily, yet what remains true is that investors must find a way to deal with these short-term hiccups.