The market keeps dipping, what should you do? - Marvin Germo

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The market keeps dipping, what should you do?

By: Marvin Germo | March 26, 2021

“They say buy the dip but it keeps dipping.” I’ve seen a lot of posts regarding this statement on social media. The market is not that good right now. It’s actually not just in the Philippines but globally. I think one great factor is the existing pandemic that no one knows when will end. If you are an investor or a trader, what should you do if the market keeps dipping? Should you start buying stocks? Should you sell your positions? Should you stop trading for a while? Should you uninstall your broker’s app? What should you do?

Relax and avoid getting emotional

The market has ups and downs. Even before you start investing, you know that already. When the market keeps dipping, relax and stop getting emotional. Your emotions won’t do you any good. If you keep on monitoring your investments, you will be enticed to close all your position because you think that the losses are not tolerable anymore. But remember, what goes down must go up. The market is not always dipping. It will soon bounce back. Patience is needed especially if you are in the market for the long term. To invest in Cryptocurrencies click here.

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Cut loss

Your trading plan should have a cut-loss strategy. This means that for every trade you make, you should set the tolerable amount of losses the moment you place your position. This will help you save from incurring more losses in case the market keeps dipping and you have positions in your portfolio. Cutting your losses is one way to protect your money as well. Trading is not always profitable. There are times that the market will get back what you’ve gained in the previous months. If you want to protect your money, always consider cutting your losses or if you have profited already, utilize the stop trailing loss feature of your broker.

Avoid opening positions yet

When the market keeps dipping, the first thing that will come to your mind is to open buy positions. I know that the market is on sale when it’s down. However, you need to be careful. Don’t be a victim of “I buy the dip but it keeps dipping.” You need a good entry point. But how can you determine the good entry point? Apply what you have learned in investing. Use the charts. Use indicators. Use technical analysis. Use fundamental analysis. If you use all the possible signs or signals, you will be able to catch the good entry point. So, if you don’t know where to enter, avoid opening buy positions until you are sure that the market is ready to bounce back.

When the market dips, there are certain factors that might affect its trend. As of this writing, the pandemic is still there and there seems a surge in the number of Covid cases not just in the Philippines but in other countries as well. If you have buying power, you can shop in the market as it is currently on sale but always know your entry point.

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