The number of traders who are willing to move into or out of the market at a moment’s notice right now is something that we all have to marvel at. Some traders are not so pleased with it though. They insist that this is making the market even more difficult to predict and invest in with any sense that they will make more money for having done so.
Wild Swings In The Market
Most can remember just a short time ago when the Dow Jones Industrial Average closed down by more than one-thousand points. It was an eye-popping number that had even the White House responding that they were paying close attention to the situation. What was even more notable was the fact that the market during that week shed two-thousand eight-hundred points at that point before rebounding by some one-thousand two hundred points in the days after says CNBC.
These are not small moves by any stretch. Rather, they all represent something in the market that is quite unusual from typical day to day trading. To try to buy or sell in a market like this is definitely something best left to the experts. It is little wonder that some are complaining about the fact that the market has changed so much as of late.
Blame Computer Trading?
Should we blame computer trading for what has happened in the market? That is definitely something that might be the cause of part of the problem. There are a lot of people who move into and out of the market based on trades that they program ahead of time.
A trader might enter a sell order when the Dow Jones drops below a certain point. That wouldn’t be such a big deal except for the fact that many other traders doing the same thing can cause the market to fall like a rock during certain periods of time. These trades definitely make up part of the reason why the market reacts as violently as it does during certain periods of time when critical levels are hit.
What Can Be Done?
Little can be done about the fact that computer trading now exists or that people often trade on emotion. All that we can do ourselves is try to defend against acting in this way ourselves. We can best equip ourselves with the knowledge that such things will happen and try to prevent ourselves from falling into an absolute panic when they do.