The first half of 2022 represents some unique opportunities for traders and investors. That’s true for beginners and experienced adults who enjoy making the most of exceptional circumstances. Currently, the stock market is riding at all-time highs, even amid a global pandemic, supply chain problems, political instability, and significant inflationary pressures. How can traders leverage the volatility of the markets and maximize their chance of earning a profit in uncertain times?
First, it’s imperative to analyze the whole situation and examine a few of the core components of today’s economic environment. That means taking a close look at how so many factors work together to create a marketplace in which the winners will be the ones who took the time to analyze and study the situation. In addition, it’s helpful to understand that volatility is a significant factor in the whole scenario.
All trading and investing enthusiasts must take volatility into account when they put their hard-earned capital at risk. What are some of the best opportunities in today’s unusual financial climate? Besides medical stocks, which seem to do well even in the worst of times, people should consider cryptocurrency, precious metals, forex, dividend-paying stocks, and more. Knowledge is power and step one of any investing strategy begins with reviewing the central facts. Here’s a list of essential points to keep in mind as you prepare to trade and invest.
Price Volatility Can Be Your Friend
The Volatility 75 Index, also called the VIX, can point the way for anyone who wants to know what the near-term market is going to do. If you ask what is volatility 75 index, then you are in for a pleasant surprise. Since 1993, the VIX has shown professional and independent market enthusiasts what to expect in terms of price volatility.
Some enjoy buying and selling in wild markets because there are lots of opportunities to scalp profits in a short period of time. Others use the VIX to alert them to get out of roller coaster price periods. Generally, when the VIX value is greater than 30, there’s a likelihood that volatility is on the rise and traders are in a state of relative fear. The indicator is one of the best warning signs of coming turbulence, which helps people adapt their orders or simply get out of the market altogether.
Medical Stocks Look Good
Primarily driven to new highs by pandemic-related factors, medical and healthcare stocks are on a major run. Note that several of the largest pharmaceutical firms are making a killing on vaccines, while other manufacturers are witnessing an increase in sales of things like face masks, disinfectant liquids, medical cleaning supplies, and more.
Shorting Against an All Time High Might Work
Read any of the financial publishers, and you’re likely to see at least one prediction of doom. Those who fear that the world’s major exchanges have topped out are usually the first to suggest short selling as a way to snag significant profits. Whether they’re right about today’s high-water mark or not, there is some evidence.
For example, the world’s most-watched index, the S&P 500, has risen almost steadily for the past seven years, with a short downturn during the early days of the COVID pandemic. But sometime in early January, the S&P reached a value of 4,796 and began to fall almost immediately. Since then, the index has dropped 386 more points to 4,410. Is this the beginning of the big correction that so many have been expecting? Time will tell.
Cryptocurrency’s Time Has Come
When stock markets run into trouble, cryptocurrencies like bitcoin and Ethereum usually enjoy a good spate of price increases. But even with widespread adoption and plenty of positive media coverage, the sector’s most significant player, bitcoin, has had a rough couple of months. And you should be aware of bitcoin pyramid scheme scams that masquerade as attractive opportunities. From a high of $64,400 in mid-November 2021, the alt-coin has fallen $28,000 to $36,400 in a matter of about seven weeks. This could be the year when bitcoin surges back to a new high, as it often does immediately after taking a beating.
Precious Metals Can Soften Losses
Historically, owners of gold and silver get some relief when stocks tumble. For all sorts of reasons, people view precious metals as a kind of safe haven in times of economic turmoil. If the world’s major stock indices experience a correction any time soon, the price of gold and other precious metals could be in for a big rise. Consider hedging your portfolio against devaluation by adding a small percentage of gold or silver, or both, to the mix.
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