A big part of succeeding during volatile markets is staying calm.
When you’re calm, you make much better decisions. When you’re calm, you don’t overreact to circumstances. When you’re calm, you think more clearly.
Being calm prevents you from making mistakes, in trading and in life.
Of course, knowing you should be calm during crazy markets is one thing; actually being calm is quite another.
One way to ensure that you maintain a measured, calculated approach to volatile markets is by having a clear handle on your financial position and a clear plan of attack. You do this through simplifying your investment approach. Instead of choosing four or five stocks out of 7,500 or four or 5 mutual funds out of 19,000 to put in your portfolio, reduce the burden by Indexing. This way, your costs are low and the probability of success increases in your favor.
The best piece of advice I’ve read about when it comes to trading strategy is the “KISS” concept. Keep It Simple, Stupid!
I can’t think of any time when simple doesn’t beat complex. That’s especially the case during volatile markets.
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