Recently, there have been many youtube advertisements about options trading as we are currently in the midst of a recession. True enough, the amount of money you can make from buying and then selling will be significantly reduced during this period of time. That said, there will still be ways we can profit from the market during this period of time. The keyword is to rebalance your constituents during this period to take advantage of the lower prices. At the same time, you can also make a profit if you foresee limited upside in the near term. But I am trying to drive at this post about having the right mentality during such times and how it can prepare you when the recovery comes.

Preparing for the upturn requires patience

Patience is the key to success. It is true because investing is all about waiting for the right moment to buy and sell. For example, you have waited for another month to save more than you have made from trading for the past 3 weeks. This happens a lot especially when you are managing a large amount of capital. Hence, there is no need to rush because of a particular news trigger or rumor. Instead, plan ahead and wait. This will likely contradict what I am about to share in the next point however, there is some truth in doing both at the same time. if there were further downside, for example, increase your price interval before buying again to save capital.

Just keep taking action when you have a chance

Taking action must be the main habit of all investors and traders. If the market behaves erratically, never hesitate to look out for good deals. I do not mean panic selling or buying but rather, you can adjust your price points by a little to save or earn a bit more. This will accumulate over time and help to cushion the impact of the recession. Most importantly, you are still well prepared when volatility comes out of the blue. If you would have stayed out of the market during this period, it is highly likely that you will continue to stay passive when the market comes back to life.

Set prices in advance to catch bargains and opportunities to sell (without feeling emotional)

Let’s just say you have lost quite a bit of money from the recent dip and you have limited capital left to deploy. You can still take the opportunity to sell the latter batches to reset your capital or even make a small profit from them. This is good practice even though it defies the logic of investing which is to buy only if the expected upside is significant. However, if you sell to get back capital, you will be able to increase liquidity and adjust your portfolio without having to dig deeper into your war chest. In other words, you are still keeping the level of risk in control.

Closing Thoughts

In short, always stay calm and active at the same time even during a recession. There is never a completely right or wrong move as the profitability of your trade constantly changes with time. Therefore, do not assume that this is the best or worse moment, rather, think logically and take action to gain more experience. Lastly, cultivate the right habits even during the worse times so that you will be able to fully maximize the best times.