Alright folks, even though I am a Short term trader, I also do long term Investing in specific cases when I find good opportunities. This content is specifically for the Investors and Positional traders.
The recent talk of the town is recession and market crash, here’s a quick guide on how to protect your capital and holdings from the market crash, specifically if Nifty 50 goes further towards the south.
Shorter time frame Market crash in Nifty 50
During a market crash, stock prices tend to fall rapidly and investors tend to panic and sell their holdings. This can lead to significant losses for investors. As a result, it’s important to be prepared for a market crash and to have a plan in place for how to manage your investments during such an event.
Market Cycle and Market Crash
It’s important to remember that market crashes are a normal part of the market cycle and that the markets have always recovered in the past. However, it’s always better to be prepared and to make sure you’re not taking more risk than you can handle.
Here are 3 simple ways to protect yourself from the Market crash :
Diversify your portfolio: Spread your investments across different asset classes, such as stocks, bonds, and real estate, to minimize risk.
Buy put options: A put option is a financial contract that gives the buyer the right, but not the obligation, to sell a stock at a certain price (strike price) on or before a certain date (expiration date). If the stock price falls below the strike price, the buyer can exercise the option and sell the stock at the higher price, making a profit.
Buying put option will not only give you the profit, alternatively helps you to offset the losses created by market crash.
Take Positions in Defensive stocks: Investing in defensive sectors: Sectors like utilities, consumer staples, and healthcare tend to be less affected by market crashes as people still need essential goods and services in a downturn. Such stocks will have less volatility and provide a cushion for your portfolio.
Follow these ideas and keep counting on your risk management.
Checkout this long term Positional trading strategy based on Price Action which takes advantage of different stocks in market crash in the video below..
