How To Make Money In The Stock Market During A Recession

In order to make money when the stock market goes down, you ought to keep in mind a few simple things. Such as volatility, risk, price and your habits.

This is no financial advice, this is just my opinion, you should do your own research.

Volatility and risk are your friends. The more volatility there is in the market, the more risk it has.

You can think of Volatility as the range that the price in the market goes up and down.

You can think of risk as the amount of money that you can lose or win. Since the price is going up and down.

Usually,

The higher the risk, the higher the return it has. Since you can make more money.

Consequently,

The lower the risk, the lower the return it has. Since you can make less money.

Now that we have that out of the way,

This is how you can make money when the market is crashing

Since you can’t see the future, you ought to do not time the market.

You simply buy low, Hold, sell high for a profit , that’s it.

If you missed the sell opportunity, keep holding until you can sell high for profits. That’s it.

This my seem very simple but this is extremely hard to do. I explain why with metaphors.

Think of someone that eat his/her nails, this person knows that’s a bad habit, this person probably wants to stop. Yet that person always ended up eating his/her nails.

Think of someone that eat unhealthy, and wants to eat healthy. Yet no matter what that person try and do , that person always end up eating unhealthy.

We all have certain habits. So going back to the stock market.

If the market clash, and the price start going down by -5%, -10%,-20%,-30%-40% and so on, what most people do is they panic and sell. Is like they stop thinking and anxiety and fear take over and they start selling,

Just think about it, If you have $1,000,000 and the stock crash and start going down you might start getting anxiety by seeing the price going down, what if you end up losing -40%, that’s -$400,000.

You see, most people can’t handle this level of lose, and they un-rationally sell even though they know that they ought to buy low, hold and sell high for a profit.

You see, you probably have a really bad habit that you got from somewhere and you probably don’t even know notice.

The interesting thing about behavior is that:

Once you do it ones, you probably do it twice.

Once you do it twice, you probably do it again, and again, and again until it becomes a habit.

Therefore, if you are able to buy low, hold, and sell high for profit, you have a competitive advantage over most people that trade on the the stock market.

As you ought to know, trading on the stock market is a zero-sum game. Meaning for someone to win, another person needs to lose.

Another kind of similar strategy is to Buy low and hold until you died. And pass the accumulated wealth tax free to the next generation.