How To Survive Financial Market Volatility

Always maintain a diversified retirement portfolio

Know how to implement the risk-reward sequence to your advantage

The big moves that include the three-digit drops in the Dow Jones probably scare you quite a bit, because there was not a single day in the past year when the broad market closed more than 2% higher or lower. Investing in the stock market can be an effective way to accumulate wealth, but the potential for market crashes can be daunting.

If you’ve built an adequately diversified portfolio that matches your time horizon and risk tolerance, the recent market downturn is likely to come as a surprise to your long-term investment plan. But selling only on the basis of a sharp drop in the market in a very short period of time is the worst thing you can do. [Sources: 1, 7, 10, 12]

Although market volatility can make you feel uncomfortable as an investor, it is a normal part of the investment cycle. One way to deal with volatility is to avoid volatility altogether. This means you need to continue investing and ignore short-term volatility.

If you are trading in a volatile market, a limit order-an an order to buy or sell at a specified or higher price to a broker is your friend. However, if you choose to trade during periods of soaring volatility, please pay attention to how market conditions will affect your trading. [Sources: 3, 8]

Even if you are willing to take high risks, you should invest in some “safer” assets. Although all investments will be affected by short-term fluctuations, investing in the right place can give your portfolio a better chance of weathering the downturn. When the price drops, your stock may be…

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