5 tips to deal with volatile conditions in market to capitalise on growth

Market volatility is inevitable. It's the nature of the markets to move up and down. However, staying invested for the long term can help in significantly cutting down the risk of volatility and creating wealth in the long term.

Volatile conditions in the market can either be strong or weak. But one thing that is certain is that the trend is going to change. This applies in both cases, if the price of the stock is rising then it will surely face a downtrend one day. Whereas, if the price of stock is falling it will surely bounce back one day.

Sooraj Singh Gurjar, founder and MD, Get Together Finance (GTF), said that the market is never unidirectional but goes in different directions as per the forces of buyers and sellers. The key to making money, he said, is knowing in what direction the price of stock is going.

"The key to beating the volatile conditions is to utilise corrections or downside moves to revisit the portfolio and de-risk it with good fundamental stocks. Bear markets are no reason to fear but it should be seen as an opportunity to buy good fundamental stocks," he said.

"Learning the technical analysis and price action strategies can also be beneficial to deal with volatility. It can surely teach how to capitalise on growth or make money out of any condition," he added.

Strategies to deal with volatile conditions in the market

There are a plethora of strategies, techniques, tools and theories available today to overcome the volatile conditions. The best strategy is not to try and predict the market. It is wise to have perpetual protection against it.

1. Fundamentally strong stocks

He said that when the market corrects, the preference of investors should be to make good positions in value stocks. 

"Fundamentally strong companies have shown a record to grow no matter what the market situation. Such stocks perform well even when the market is rough and others are underperforming," he opined.

2. Discipline

Discipline is very important. "An investor must not be intimidated or keep waiting for prices to keep falling. Having good quality stocks will always create profit records 5-10 years down the line. One should be clear about his/her strategy."

3. Strategy

Strategy is another key aspect to capitalise on growth. Not all theories work the same in every condition and the same goes with strategies, tools, indicators, etc.

It is important to make basic concepts clear. Practical and dynamic knowledge help in moulding strategies accordingly. Apart from all this.

4. Diversify

Warren Buffett says that "diversification is protection against ignorance". This is the most powerful risk management strategy that works in every market condition. A diverse portfolio easily balances profits.

5. Stop Loss

"It is good to place stop-loss orders. These orders protect from heavy losses. There might be cases when the price trend does not go in our favour. In these cases, stop loss may not make profits, but surely not incur heavy losses," he summed up.