Profit from falling prices?
The coronavirus kept the world and the stock market on tenterhooks in 2020. Experts predicted it years ago, but now it has come true: A previously unknown virus has spread from Wuhan in China across the entire world. At first, it seemed unrealistic that the virus would be contained in the near future - a global [...]
The consequences of COVID-19 were already felt on the financial markets in the first few days after the outbreak. Many prices plummeted; for the DAX, the week after the outbreak was the worst week since 2011.
For most people it was clear: At the moment you can't get much out of stocks. But was that really the case? Or can you also make a profit from falling prices?
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If you had claimed before the pandemic that a virus would soon occupy the whole world, you would probably only have gotten a few laughs.
But it happened: From a ?wet market? in China, the virus spread first only in Wuhan, then in China and then all over the world. The coronavirus causes many sick people and deaths.
The first political priority was to contain the virus. However, there were doubts right from the start that this would be successful. There was hoarding, many people were out and about less at the start of the pandemic (consuming less) and major events were banned.
Quarantine zones were repeatedly established in several European countries, e.g. Who remembers the first serious incidents in the German district of Heinsberg? where an entire village is under quarantinee stood?
Examples of the Corona episodes
All of this naturally had consequences for the economy & the financial markets.
Many companies trembled; the DAX had not seen such a large drop since 2011.
Let's look at two examples: The Tesla share reached its peak on February 19, 2020. From that day onwards, things went steadily downhill until March 1.
The same applies to the shares of Alphabet, the subsidiary of Google. From February 19, the share price fell steadily.
When prices fall, there are different types of investors: Some panic and sell their shares, some see it as a correction and wait.
It is also a good idea to buy new shares during such phases. They are cheap now and it is likely that prices will rise again at some point.
From falling prices profit
Classic Shares
In classic stock trading, you can profit during black phases by buying new shares now.
Securities are cheaper and the crisis (including the next one and the one after that) will certainly not haunt us forever. Sooner or later there should be an upward trend again. However, it is impossible to predict when this will happen.
Getting started with stock trading is not difficult: providers, such as flatex.at - Online Broker
(our recommendation) offer uncomplicated online trading. After registration and personal verification you can start trading.
CFD-Trading
CFDs are contracts for difference. One bets on rising or falling prices.
CFDs make it possible to make profits even when prices fall.
Long" and "short" positions can be opened. If you open a "long" position, you will profit if the price rises. If you open a short position, you will profit if the price falls.
Registration with a CFD broker works more straightforward and faster than with stock brokers.
Demo accounts are available to try out trading.
For the trade we recommend Plus500 (72% of CFD investor accounts lose money). You can find more CFD providers in the Broker comparison.
This is how CFD trading works:
When the Markets recover after the crisis?
At the time of the crisis, it is not possible to predict when the markets will recover. But experience teaches that recovery is usually when it is least suspected and the outlook is darkest.
The coronavirus has thrown a huge spanner in the works for the entire global economy: many factories in China have stopped production, which has led and will continue to lead to supply bottlenecks in Europe and around the world.
However, shares returned to normal towards the end of 2020 and - spurred on by an unimaginable Quantitative Easing program ("money printing") of the central banks - to one of the strongest rebounds of all time.
