Market Volatility: Four Ways To Navigate Tough Waters

Everyday we are seeing news stories throughout the globe that have the potential to rock the markets, middle east unrest, global catastrophe and lingering debt crisis. 

Meanwhile none of this matters to you as a trader, you still need to earn a living and trading is your craft.

1) Always play to the trend in your names:  In other words buy strength and sell weakness.  When I see a trader constantly buying weakness, I know that trader will have a short career and in this environment you will be out of business quickly.

2) Use hedges and / or pairs trades to reduce risk:  Let’s say you have two stocks in the same sector one looks good (JPM) and one looks weak (GS). 

Buy the strond and short the weak, you will still get exposure  with reduced volatility and who knows you may make money on both sides.

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http://www.hedgefundlive.com/blog/market-volatility-four-ways-to-navigate-tough-waters

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