There is no doubt that the war in Ukraine has caused plenty of anxiety for traders and investors around the world. Until the war ends, everyone will remain on edge. And don’t forget that Fed policy has turned hawkish. There’s little doubt they will be raising rates at their next meeting in March and beyond. How should we handle the current market uncertainty?
Market uncertainty is always there, but the level varies. Right now, it’s very high and that makes trading exceedingly difficult.
How to handle current market uncertainty
For one thing, don’t try to outsmart the markets or you may wind up in a world of hurt. I talk about it all the time, but I’ll say it again: the message of the markets can be viewed simply and honestly though the lens of technical analysis. The indicators will never lie to you.
Right now, few market trends have established themselves, which is why trading is so hard. If anything, a bearish trend seems to be the best way to play this market. But that comes with plenty of risks.
What happens if you commit to the bearish side and news breaks that the war has been resolved? You’ll scramble to take your positions off. If you have index put working as insurance, your portfolio won’t be completely destroyed. But then you’ll want to come jump back in and chase the new trend to make up for losses – maybe before the trend is confirmed. And you could get hurt yet again.
My best advice is to slow down and take your time. Markets often go though periods of turmoil but manage to pull through. While we wait for the uncertainty to pass, practice chart analysis and learn some new skills. Let others take risks while you wait patiently for better market conditions. It won’t be like this forever, and when the markets turn upward, you’ll be ready.
