One of the biggest fears of every single investor is a stock market crash. Let’s examine the typical “what if” scenario.
What would happen if I had invested everything into the stock market and it crashes?
One of the easiest ways to eliminate that fear from your being is through candlestick signals.
We all can see those image of the great stock market crash of 1929 as if it had just happened yesterday. Over the past 20 years, we have had multiple stock market crashes. However, these stock market crashes have had different results. In this case, we had institutional investors trying to fail and how in save their investment record, while the public was trying to get into the stock market.
While no one wants a stock market crash, it is not something you have to fear on a daily basis. Instead, you can use candlestick signals as a way to protect yourself. Despite what you might have heard, a stock market does not crash unexpectedly. An example of this will be the stock market crash of 1929 which had the majority of selling occurred in October, whereas it actually began in August. Recent stock market crashes over the past 20 years have revealed definite candlesticks sell signals before the big sale day. There is absolutely no reason to fear the stock market crashes. As a candlestick investor, you are able to utilize the signals and be able to prepare yourself for the situation. When you are able to identify specific market trends you thereby can eliminate any apprehension about upcoming market crashes.
One of the primary advantages of candlestick signals is you are able to identify investor sentiment in the general market trend.
Usually, a stock market will crash at the end of those downtrends. With this in mind, you will realize that the big selling days do not come as a surprise. In addition to candlestick signals reducing any apprehension about the stock market, they also allow you to be in a position of either being longer short for current market trends.
One of the most dangerous rationales for any investor is buying into the market because “it’s different this time”. Many people believe that the United States stock market has been changed due to the level of technology in changing as well as the many online tools that are designed to make trade easier and safer, however, this simply is not true.
The problem with many investors today is that they are focused on worrying how the next crash is going to be different than the last, whereas the vast majority of stock market crashes have all been the same,
and it is more important to look at those similarities than differences …
By looking back at the past five stock market crash is beginning in 1907 and in 2010, all of them had striking similarities that need to be looked for. One cannot live on a daily basis expecting the stock market to crash. More than likely it will be years before another significant crash. The best that you can do is to watch for the proper signals and simply be prepared for the inevitable.
It is important to realize that the market is always going to rally strong before the crash happens, and this is easy to spot.
Another similarity that has happened in every significant crash is an external catalyst, an example of this was in 1907, after the major San Francisco earthquake and the United States scooped up the vast liquidity from around the world causing the market to crash. In some cases, it may be a simple new financial contraption that is not understood and it injects leverage in to assist them that is already unbalanced pushing it further into chaos. In 1987, we saw this with portfolio insurance, then in 2008 it was due to the appearance of mortgage-backed securities, and once again in 2010 it was due to algorithmic trading. All similar situations just new circumstances that can be learned and avoided.