There is a major stock collapse happening right now and it is affecting millions of investors all over the world. Certain stock markets, including the Euronext Paris and the Stockholm Stock Exchange, are experiencing price drops similar to the last financial crisis.
Naturally, this has created extreme worries among financial experts and investors alike who are doing everything they can to stabilize the situation.
However, instead of panicking, which often leads to making not-so-great decisions, there are ways that you can benefit from a market collapse as well as protect yourself from further loses. In the following article, we’ve outlined the two best methods for this.
Start Short Trading
Even though the international securities markets have already experienced record-breaking drops, it is expected that the trend continues, which is why we recommend that you start shorting.
Short trading means that you bet against the market and make a profit when securities drop in value and it’s a great way to make a quick profit in this chaotic scenario.
Now, most traditional brokers offer options to short certain markets, but it can be rather complicated. Instead, we recommend using an online CFD and forex broker because they make it just as easy to go long as to go short on any market you want to.
Add to that the fact that online brokers offer leverage which allows you to maximize your exposure on every trade, and you have the option of making quite a nice profit from just a handful of trades.
Obviously, trading is not completely risk-free and you have to know what you’re doing before you get started. It’s never a good idea to trade “blindly” and we advise you to focus on shorting assets and securities that you understand and can analyze properly.
Furthermore, don’t forget that markets always bounce back so be prepared to stop short trading when you start to see indications that the market is about to turn.
Move Your Investments to Safer Markets
Besides short trading and trying to benefit from declining securities prices, you should also try and protect your investments if you haven’t already done that. The best way to do so is to move your funds to safer and more stable markets and there are currently two markets that stand out as the better options.
- Commodities (gold)
The commodity market is generally considered safer than the stock market during a financial collapse and that’s where most expert investors “protect their funds”. Although, you can’t just invest in any commodity. For example, oil has already dropped to a 4-year low and other commodities are experiencing similar developments.
Instead, gold is considered to be a safe-haven that, historically, increases in value when the stock market is struggling. Therefore, we suggest that you try and protect any stock investments you have by allocating the invested funds from struggling stocks to gold.
Another option that could potentially survive a world-wide financial crisis is the cryptocurrency market. Once again, there is no guarantee to this but many experts are convinced that cryptocurrencies won’t be as affected by a global economic crash as other markets.
With that said, it’s not advisable that you put all your eggs in one basket and instead of placing all your investments on cryptocurrencies, you could diversify your portfolio and perhaps split it between a few of the bigger cryptos as well as gold. Remember that nothing is written in stone!
Keep in mind that no one is able to predict exactly what will happen to the global markets and if we’re headed for a complete meltdown or if it’s just a correction that will level out soon.
That’s why you have to be very careful with how you trade and invest and only make decisions based on your own predictions and analysis.