How to Minimize the Risk in the Downward Trend of Stock Market

There are risks in the stock market, so you should enter with precaution. In this market with profits and risks coexisting, the investors should have the risk consciousness at any time and be prepared for the risks. So how to minimize the risk in a downward trend market?

Firstly, you need to learn short positions. There are many masters who like the short-term operation, sometimes it can make great profits, but it is very difficult to make profits for some people who neither have time to read the stock plate, nor are able to grasp the hot news. Therefore, in stock operation, you not only need to buy stocks in an upward trend, but also have to learn to be in short positions. In the sense that the stock market is very difficult to operate, hot news is difficult to grasp, when the majority of stocks prices are falling sharply, and minority of stocks have small rises, it’s time to consider operating in short positions.

Secondly, slump is also opportunity. Slump can be divided into the slump of the market or slump of individual stock. The chance of slight declines is much smaller than slump of the market. Slump is often caused by critical bad news or accidental events. We should be cautious about precipitous falls at the relatively high point of the market, but if slump happens a long time after major falls or slight declines, it means that you should pay attention to this type of stocks, because opportunity of great stocks is coming out of this kind of slump.

Finally, control from the positions. Many people like fully invested operation, which they believe that they can maximizing the profits in this way, but so do the risks. Once the market has new changes, and the market is falling down, people who have fully invested will suffer serious losses. Therefore, investors should be flexible in positions according to the market condition, when the market is going well, you can fully invest; when the market is unstable, investors should appropriately reduce shares (or in short positions), holding a small share of stocks for flexible operation.