Is It A Good Time To Day Trade With Our Current World Events?

By Author: Nicholas Swezey
Total Articles: 3
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The right time to get back in the market may be approachingquickly. With worldwide economies loosing value, sometimes dramatically, it can be a scary thought to put your hard-earned money on the line. However, a prudent investor will realize that good opportunities are appearing if proper research is done.

If you look at a long-term chart of the Dow Jones average, you will see that it is currently at the 2002-2003 levels. It has dropped dramatically like the financial collapse of 2008-2009, but we have yet to expect another great depression. It may take another six years or more for a large upswing in the markets. The market makers that I read hope the market will not drop below 6400. For some, this will bring hope and some peace of mind about starting to invest again.

Dollar Cost Averaging

The concept of Dollar Cost Averaging comes to mind in the current market situation. It is the process of buying stocks or similar investments on a regular basis, such as once a month, using a fixed amount of money. When prices are low, you are able to buy more shares. When prices are high, you buy fewer. In ...
... this way, you are able to take advantage of temporary low prices. This is especially helpful for long-term investments, such as retirement accounts. It may go against human nature to buy stocks when everything is falling and red but in fact it can lead to a bigger payoff if done correctly.

Don't Wait Too Long

As soon as you believe the markets will not drop much more, that is the time to start investing. When an upswing begins, it may happen so fast that you will miss a good portion of it. There are literally billions of dollars of cash on the sidelines, just waiting to go back into the market when the time is right. You can imagine what impact that might have on prices because of a surging demand but limited supply of stocks and mutual funds. Don't wait too long!

Which Companies to Buy

There are a lot of low-priced stocks right now. Don't jump into any old stock just because the price is low. There may be good reasons for it, such as the company being dangerously close to bankruptcy. One popular example is GM. Their stock price has dropped incredibly far. Is it a good deal? The government will probably not allow them to go into bankruptcy because that could have catastrophic affects on the country. Even if they survive, though, they may not thrive, and the stock price might hold its value or drop even more. Nobody can predict the future of GM. This is just an example of how difficult it can be to make a trading decision at the present time.

You also need to consider how the company is adapting to the economy. Are they offering low-price items to their customers? Are they reducing expenses significantly, such as layoffs, to stay in business? Do they have access to enough credit to stay operational? These are very important questions to consider before making a trade.

Will the Economy Get Worse?

This is probably the single most important factor that traders are considering right now. Why put your money into investments if they are just going to drop again? The government is trying hard to stabilize the economy, but there are many experts who believe there is more doom and gloom in the future, with more foreclosures, bank failures, and lost jobs on the way. A lot of this depends on how the government handles the situation and how the public perceives their actions. If the public believes things are stabilized, they will begin to spend and invest again, businesses will have more money and they can hire more people, and the economy can begin to thrive again. When this will happen, nobody knows for sure. Hopefully in 2009 it will, but it may be 2010 or later.

Nicholas Swezey helps people learn about Day Trading on his site, http://www.HowTheMarketWorks.com.
Nicholas Swezey helps people learn about Day Trading on his site http://www.HowTheMarketWorks.com. The site allows investors to set up a free day trading account and use real market data to practice investing without any risk of loosing real money.