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How to protect profits, restrict losses after rally amid a crisis

Keeping the trades with smaller horizons and tighter stop losses could pay-off eventually.

June 13, 2020 / 12:32 PM IST

Shubham Agarwal

The recent run-up during the pandemic has been overwhelming. Such run-ups are nothing new to the market after penetrating into the multi-month, and at times multi-year lows. We all need to understand that there is a peculiarity to these moves that changes the velocity of the moves.

Let us understand this peculiarity to better understand the rapid move especially upwards and put corrective measures in place to help us trade the upticks in same pace that we trade with during any other upmove that is penetrating into multi-year highs.

The genesis of the velocity we talked about lies in the preceding causes of mayhem. Everything gets discounted in prices as it is contemplated by the consensus, be it good or bad news. Now in normal situations this is what gives us trading opportunity but during systemic risks sensed by the market (market participants) these risks turn into shocks.