If you want to understand why the markets are collapsing, read on to discover the reasons behind the recent Black Monday on Wall Street—and how you can still earn a tidy sum during a market crash.
For those who have ever wondered when the next financial bubble might burst – it just did.
For one, if you saw how stocks ended last week and checked the global indexes last night, you can tell there’s a lot of fear in the markets right now.
Global markets have entered a perfect storm for a sell off.
• The S&P 500 experienced its largest single-day decline since September 2022.
• The Dow plummeted by over 1,000 points.
• The Nasdaq 100 lost nearly $1 billion in market value.
• The VIX, Wall Street’s Fear Gauge, reached levels last observed during the 2008 Financial Crisis and the 2020 pandemic.
And that was only in the US.
Source: Reuters
There’s no way to predict exactly when a stock market downturn will occur, but it’s safe to assume it will happen eventually. Market downturns are normal, and, unfortunately, they’re also unavoidable.
A market crash essentially means that stock prices across various sectors of the market take a sharp decline. Many investors start selling their shares at the same time, and stock prices fall. When this happens on a broad scale, a market crash can occur.
Over the last few days, the Japanese yen has surged and hit levels that haven’t been seen since World War II.
The recent selloff is largely due to the yen-carry trade unwinding after the Bank of Japan raised rates twice in a row for the first time in 17 years. This move caused the yen to rebound from a 40-year low of 161.61 to 142.71 against the U.S. dollar
Traders responded by selling off foreign assets and converting their money back to yen to limit their losses. It looks like the market might have gone too far too quickly, so we’re now seeing some adjustments during the European trading session as it moves back to more normal levels.
Here’s what we found the other day: US stock market rebound after major market selloff during recession fears
Many people associate market crashes with losing money. But if you take the right steps before a market downturn, you might not lose money at all.
In fact, the opportunistic would see it as the best time to take advantage of the crash and make money from it.
Take a cue from the “Rich Dad Poor Dad” author Robert Kiyosaki who expected a historic crash across financial markets.
“The biggest crash in world history is coming,” he said, adding that sell-offs create buying opportunities but that markets wouldn’t recover for a long time. “Get more gold, silver, and bitcoin while you can,” he tweeted.
And because the entry point has been lowered, it’s easy for beginner traders to tap into the markets and start building their portfolios with minimal initial investment. It just takes the right approach.
While we did say that the crash was caused by the yen-carry trade, opportunities remain; the revised rates remain low enough for investor demand. As with how it has been done, the Japanese yen’s low-interest rates allow traders to borrow yen at low rates and invest in higher-yielding assets or currencies that are temporarily undervalued.
Traders are, however, advised to be careful of sudden increases in the yen’s value due to upcoming BOJ hikes and Fed cuts; this can affect their returns.
Trend trading, a strategy based on identifying and following the direction of market movements, can be particularly effective during such volatile periods.
We’ve written an article on why trend trading is one of the most effective ways to capture the hottest moments in the market.
Read it here: The glamour of trend trading
Since CFDs are derivatives, you don’t own the underlying asset. This also means you have the flexibility to respond swiftly to market crashes, capturing opportunities as they arise.
Another word of wisdom to take heed from is this advice from Robert Kiyosaki:
Market crashes can be intimidating, but they also present opportunities for traders who know how to navigate them.
As an award-winning broker, VT Markets equips traders with everything they need to profit from the markets, regardless of market trajectory. By trading CFDs on the VT Markets app, you have…
…which makes it easy for traders to find opportunities to profit, whether it’s a bear market, a crash, or a downturn.
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