10 Ways To Limit Losses in Market Corrections

10 Ways To Limit Losses in Market Corrections

10 Ways To Limit Losses in Market Corrections

Here are ten ways to keep your account safe during a market correction, when support levels break, up trends reverse, and oversold indicators just get more oversold.

  1. Your long positions should be stopped out quickly as the first short term moving averages are broken early on.
  2. You should already be out before the pullback turns into a full blown correction as your holdings lose key short term price support levels.
  3. Trade smaller and smaller as volatility expands.
  4. Tighten the timeframe of your signals, buys and sells can become faster.
  5. Move from trend signals and look to buy the deepest dips. The 30 RSI (14) on the daily chart can be a good indicator near bounce zones.
  6. This type of market is better for range bound signals.
  7. Take good profits off the table while they are still there.
  8. Consider using short side signals if you have a tested and proven system.
  9. Look for opportunities to buy stocks at prices you have wanted them at for a long time for long term holding.
  10. Watch long term moving averages closely to be ready to buy a reversal in the downtrend. The 200 day and 250 day simple moving averages are good long term trend signals to watch for turns in either direction.