Don't Get Wiped Out! How I Trade During a Crash
In a Nutshell
Buy the dip rather than shorting during the current market uncertainty, but keep positions tiny enough to withstand a drop to Nasdaq 655 without panic-selling. Position size is the critical risk control—only buy what you can comfortably hold through volatility, avoid margin/leverage, and stick to quality names like QQQ/SPY over speculative stocks.
These notes were generated by AI and may contain inaccuracies.
The Nasdaq market is up nearly half a percent. The VIX index remains elevated and is currently testing a support zone. The volatility index rises when fear is pumped into the market. Oil prices are rising, which increases the chance that inflation will increase further and that the Federal Reserve will eventually raise interest rates. The FOMC interest rate decision is next week. According to the Fed interest rate monitor tool, there is an 89.7% chance that the Federal Reserve will take a pause and a 10% chance that the Federal Reserve will raise interest rates at the next meeting.
The Nasdaq market is currently testing a crucial support zone at 700. At market opening, lows of 701 were tested. If the Nasdaq market drops below 701, it could break below 700. When zooming out, previous lows were at 655. If general markets start to decline, individual stocks will fall harder, especially speculative stocks.
It is still more logical to buy the dip than to go short. Beginners should not short at oversold levels because most are not skilled at managing and mitigating risks. If the market starts to recover because it is already oversold, the risk of being left with a position that must be held is too great compared to the potential profit.
Markets look slightly overbought and will probably fall back. There is still too much uncertainty at the moment. The profit potential, even if markets drop to 655, is still significantly greater than the loss potential.
Position yourself as if you could be wrong. Calculate whether you can tolerate the volatility or downturn based on your current position size. If the answer is no, adjust your position while still in profit.
The worst-case scenario is overbuying the dip, the market keeps falling, being unable to take the losses due to margin or leverage overexposure, getting shaken out, and then watching markets recover while feeling left behind.
If you can buy $10,000 worth of shares, you should perhaps only buy one or two. So that you have the flexibility, the tolerance to endure that volatility.
Markets opened quite green and then started selling significantly as soon as support was broken and selling pressure set in. Currently there is no selling pressure yet, with markets under a lot of buying pressure trying to stay elevated. If there is a breakthrough below 706-705, markets will return to retest the lows of 703, then from 703 to the lows of 700.
The last time the 700 lows were tested, when markets broke above the 4-hour EMA, markets really started to recover and a large part of the action began.
You don't have to be super early to buy the dip. You may be late, and even if late, as long as the direction is in your favor, there is so much upward potential. Markets are more bullish than bearish.
Find a good stock with value or buy QQQ or SPY for diversification without becoming overexposed. Don't buy nonsense stocks that are incredibly overvalued. Buy with a position size you can tolerate and don't use margin or leverage.
Live trading occurs every morning with market opening sessions lasting 30 minutes to an hour. Recent live sessions can be watched via the second link in the description. The LPP lesson library is designed for complete beginners with one-time payment for lifelong access, currently offering a $225 discount for the October sale, which comes to less than a dollar and 30 cents a day. Members who signed up in 2018 paid once and still have access today.
Even having only one stock is better than being overloaded and overexposed. Keep it tasteful and don't make it too complicated. Stay patient and stay calculated. Some stocks look slightly weaker than others while waiting for confirmation of a breakthrough of support. If the Nasdaq market starts to break through support and sells off, many AI and AI infrastructure stocks or memory chip stocks will likely start selling as well.
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