Here are ten ways to keep your account safe during a market correction, when support levels break, up trends reverse, and oversold indicators just get more oversold.
- Your long positions should be stopped out quickly as the first short term moving averages are broken early on.
- You should already be out before the pullback turns into a full blown correction as your holdings lose key short term price support levels.
- Trade smaller and smaller as volatility expands.
- Tighten the timeframe of your signals, buys and sells can become faster.
- Move from trend signals and look to buy the deepest dips. The 30 RSI (14) on the daily chart can be a good indicator near bounce zones.
- This type of market is better for range bound signals.
- Take good profits off the table while they are still there.
- Consider using short side signals if you have a tested and proven system.
- Look for opportunities to buy stocks at prices you have wanted them at for a long time for long term holding.
- Watch long term moving averages closely to be ready to buy a reversal in the downtrend. The 200 day and 250 day simple moving averages are good long term trend signals to watch for turns in either direction.