How to Invest in a Volatile Market
The airline stocks have been full of volatility, and quick headlines that push the market from one way to the next. Many investors are sitting on the sidelines frozen by the rapid changes in the market being unable to make clear decision. When we look at the past few weeks of trading much of the large movement that are occurring in the U.S stock market is occurring after hours as compared to regular trading hours.
We have all heard the term being said of “the new normal” regarding the social economic environment in the world Post COVID-19. Many are embracing the change very well with wearing masks in public and certain amenities and activities being adjusted to accommodate for social distancing recommendations. Sports games and musical concerts have been actively discussion the changes that will occur to be able to continue to provide value to its staff and clients while still remaining conscious of its audiences needs.
Technology has made the world a global market. Traditional trading has dramatically changed with the introduction of technology. Orders that would originally take hours or even days to be filled are now being filled within seconds. News events were once digested by the top media and market analyst. The top articles are then sorted through and then sent out into the market strategically.
Now information is released with a moments notice to retail, and institutional investors all around the world. With this being said we are noticing an uptick in after-hours trading in the U.S. Market.
When we look at previous volatile movements in the market most of the volume of trades occurred during standard trading hours. As the news was released and the markets open and people started their days, trades were placed and money was moved in the market.
The reality of today’s trading world is that it no longer operates only from 9:30 am to 4:00 pm (EST). Orders are now starting to be placed in the late hours as the Australian Market opens up and starts to trade U.S. stocks. Then proceeding afterwards we have the Asian Market open which is then followed by the European Market trading session.
All of these markets are now also involved in the trading that you and I participate in locally. This plays a large role in why the market has had massive spikes in price action during the after hours markets. Not to mention that the internet has now allowed for operations to run seamless at all hours of the day. Meaning that although the market may not be open yet, that doesn’t mean that decisions are not yet being made.
For small retail investors this can be extremely stressful as the market tends to open making a jump in either direction. Having tight risk management is a key factor to consider when holding trades on rapid moving stocks overnight or over through the weekends for short term trades. Risk is essential when trading and is an important factor to keep in mind when maximizing profit potential. As we all know the best rewards require risk.
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Changes to the Airlines
Airlines have made it firm and known that face coverings are required for travel. Before when individuals were able to fly with a common cold, now you may be asked to reschedule your flight. With airlines clamping down on policies they are working hard to get more of their fleet in the air.
A few airlines like American Airlines (AAL) and Delta (DAL) have already been looking at the plan to reintroduce aircraft back into service. The process to get aircraft flying again will take time as they will require some maintenance work prior to getting airborne again. Considering that an aircraft on the ground is a cash draining asset its important that these birds start flying again.
When we look at companies like United Airlines (UAL) which is currently burning through $30 million dollars a day, its vital that they get their birds in the sky. With only 15% of their total fleet flying the rate at which they are going through cash on hand is alarmingly fast.
We have already hear from world recognized sources such as Warren Buffet state that he has lost interest in the airline market. After having a great run for the last 20 years he is unsure how they will recover from the current conditions in the industry.
For us who are actively in the aviation industry we can see the sunrise at the end of the horizon. We understand that aircraft are incredible safe and sanitary methods of travel. The professionals in the industry understand that new and technological advances are being made to enhance the comfort of guest who need to still fly.
Although much of the world currently has lost their travel bug with the fear of the novel virus we are starting to see travel projections start to recover. For example we looked at a short domestic leg from Orlando international airport to Los Angeles International airport for next week costing only $128 on a low cost budged airline. The same route late in the year near September is selling for twice the price.
So airlines are pricing tickets with the idea that demand levels will rise and that individuals and families will start to travel and fly more again.
Speed of the Markets
Understanding the speed of the markets is key to determine the time period of your trade. Some trade strategies are best used for long term trades that investors will hold for weeks, months, maybe years at a time.
Many of the trades that we focus on in the current market condition are weekly and monthly options contracts in the stock market and swing trades in the FOREX market.
The reason that many of our trades that we look at are not positions to be held years out from now is there we loos the probability of accuracy.
When we look at trade probabilities its important to look at factors like average price movement over a given period of time, the daily trading volume, what are the fundamentals behind the technical movement. When we have a tighter time frame we are able to better analyze and hypothesize a probable outcome. The variable are less considering the time period is shorter.
With less time period we are able to narrow down the potential price point depending on the current momentum and trend of the underlying asset. More importantly the reason that we trade on a weekly to monthly time frame is also to keep cash flow consistent.
When we operate our trading business we have expenses that need to be paid on a weekly and sometime monthly time period. So when we make our trade for those time periods we are able to ensure our business remains profitable and operational over the given period of time.
Trading with Technology
As the U.S. Market continues to create volatile swings and create confusion for investors we decided to partner with the worlds best Foreign Exchange Education Academy. Trading in a volatile market can be chaotic for long term passive investors as they experience the downfall and drops of the market. Many investors are often fearful of putting on new positions during periods of high volatility as they associate these market conditions with there being greater risk. With proper risk management these market conditions can provide incredible returns for those with strategies that thrive in these market conditions.
Our partnership with the world most reputable FOREX trading academy is a decision that we made in hopes to best provide you with tools and information that will exponentially enhance your trading experience. To make the offer even better we have a current promotion that will allow you to gain access to the best trading software in the market for free!
Let’s take the time to provide some clarifications on how the 2 &FREE™ program works. As a customer, when you refer two (2) active paying customers to any package of the same value, you qualify to get your monthly subscription waived.
We’re excited to have you a part of our global community of forward thinkers, passionate dreamers, and individuals from all walks of life working to build a better and fulfilling life. Not a member of our FOREX trading academy yet?
Click the link below to get our exclusive trading packages today!
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options: https://www.theocc.com/components/docs/riskstoc.pdf
Air Market Group content is provided solely by Air Market Group LLC and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. Air Market Group, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. Air Market Group is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. Multi-leg option strategies incur higher transaction costs as they involve multiple commission charges. Air Market Group is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
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