Zerohedge posted an informative article with a clear explanation of the safeguards that the SEC has placed in the Stock Market since 1987. Computerized ‘Circuit Breakers’ are in place and monitor daily price movement. If, and when, the primary market indexes drop a certain percentage in a day, they shut down trading. The first sentance in the article however, summarizes the best take away advice, “It’s hard to predict when a stock market crash will occur, so the best defense is to be prepared.”
But how to be prepared? If you’ve registered here on my site you have been provided the free e-book on how to setup an inexpensive options hedge which can protect your portfolio in the worst of times. I still believe it’s the best way to participate in this bull market while hedging your risks so you can sleep at night. Given the turmoil in the Middle East, North Korea, the South China Sea and the economic uncertainty of the EU, the list of ‘first dominos to fall’ is a long one.
You can read the complete article here; Visualizing What Happens to Trading During a Market Crash.