Hugh Kimura, founder of Trading Heroes gives the lowdown on trading after last month crashes in the market.
Hugh Kimura joins us to highlight the benefits of Foreign Exchange trading versus stock and gives us insight into the potential opportunities presented by both during a crash. The first thing to understand is that there is not necessarily a correlation between market trends and Foreign Exchange pairs. He reviews historical crashes and points out where pairs tend to line up, where some fluctuate independently from the broader market, and where others have an inverse relationship.
He reminds us that it’s much easier to go long on a stock than to go short as there’s been a bullish bias, especially prior to the recent crash. On top of that, not all brokers will have options available to short stock. By contrast, there is ample opportunity in Foreign Exchange trading during times of volatility long or short. When the stock market crashes, it brings all stocks, good, bad and in between down with it. But even in such times, you’ll be able to find FX pairs to make money on.
For Hugh, it’s important to focus on buying stocks within industries individuals understand. The more you are familiar with a brand, the better you can predict where it’s going, rather than act out of fear. To highlight this concept, Hugh discusses Microsoft with investors who were confident enough in its longevity despite the history of significant drops like the .com bust. He then ties it into some best practices from hedge funds, which leverage their expertise while also incrementally buying up stocks during downturns (or dips in a brand’s performance) to both manage risk and take advantage of the upside.