A global pandemic, economic downturn and protests: Agile trading in times of volatility

The state of today’s financial markets can be characterized by profound volatility and uncertainty. Several factors are driving this volatility, including pervasive social unrest protesting racial injustices; the destabilizing effects wrought by the coronavirus pandemic; mass unemployment; and economic upheaval. These globally interconnected macro events have created wide shifts and fluctuations in the market – prompting many traders to determine the best way to navigate these dynamics. While there is no panacea that will give us all the answers, applying an agile mindset to adapt and transform repeatedly, based on market data, will help significantly. This mindset to innovating trading approaches can be applied in the best of times and worst of times.  It starts with a shift of mindset.

These three aspects that shape the shift to agile thinking include:

  1. Not Following the Majority Instinct.  It may seem counter to the instinct of finding strength in numbers, but in the case of trading, that’s not always the right way to go. The majority tend to follow a herd instinct and do what everyone else is doing – believing that action is right thing because it feels “safe.” An agile minority are always exploring a different path, getting more educated to see the landscape more clearly and make wiser choices for themselves.  The key is to carefully evaluate data connected to market, private and public sector dynamics driving these fluctuations to make smarter trading decisions

     

  2. Being Ready for a Range of Futures.  Being agile is about not trying to predict the future and hope you are right. It’s about being ready for a range of future outcomes The scale of change, and economic and market interconnectedness, paired with a 24/7 news cycle and information overload, makes it impossible to predict the future with any certainty, whether it is next year, next month or next week!  Embrace the uncertainty and have a flexible strategy that is ready for a range of contingencies.  Hope is not a strategy, education and flexibility are.

     

  3. Scaling In and Scaling Out.   With more education and flexibility, agile is about placing a small bet to start, testing, iterating and then verifying a strategy, with a view of the future that is emerging.  Once that strategy is in place, one can progressively consider more risk, in a calculated and managed way, to carefully balance risk and rewards.  That is a risk management first approach.  Anything less is too much like gambling, and the house always wins. 

Education, practice, prudent risk management and continuous learning are the fundamentals to developing an agile mindset.  I know from firsthand experience as I have spent a career educating businesses how to pivot to an agile mindset and operating system.  It is counter intuitive and uncomfortable at first; instinctually, people and teams can unconsciously revert back to a traditional mindset which undermines their agility. That’s where the majority live.  To cross over to the other side to join the minority takes a commitment to becoming a student of agility and a learning journey with support and community.

It’s the same with trading and investing.  Crossing over to the other side, leaving the majority and joining the minority, takes a commitment to becoming a student and a learning journey with support and community.  The lessons, discussion, and engagement with a community of like-minded student investors create opportunities to invest with more confidence and purpose – particularly in times of crisis and uncertainty. Agility is not something that can be easily turned on. But, with the right training, education and thoughtfulness, the agile mindset can take you a long way.

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For educational purposes only. Trading is risky and you can lose money