- Don’t panic. This thesis should also be attached to the rule of investing only free funds that you would not be sorry to lose. Yes, it sounds absurd, but this attitude to money and lack of excitement will preserve your health and capital.
- Always have a financial pillow. Investment gurus are known for their successful and highly profitable deals. When to buy assets at an attractive price, if not in a crisis? So it’s worth looking at strong market corrections as new buying opportunities, leveraging a pre-prepared financial cushion, such as in bonds.
- A red portfolio is not a verdict. Financial markets have a distinctive feature – cyclicality. Fundamentally strong and relatively reliable markets sooner or later recover their capitalization and, based on past experience, even surpass it.
- Get rid of the trash. Nothing clears up the view of a portfolio like a market crash. It immediately becomes clear what you need to get rid of and what, on the contrary, you need to buy more of. At times like these, you need to think things over carefully so you don’t sell out on a panic and buy up trash that didn’t just happen to be in the market right now.
- Reduce or close margin positions. If you are trading short on a panic sale, there will come a time when the market will rebound from the bottom. So the best thing you can do is to lock in your profits and close the position piecemeal. If you have a long position and the market is going down, the situation is more complicated. Many people find it hard to close a trade at a loss. But this way you are more likely to save your deposit from a margin call, and you might be able to open a position at a lower price in the near future.
Remember that there are no truly protective assets in a crisis, but the acquired knowledge and experience will never be devalued!