When I hear someone talk about getting beaten up by a “once in a lifetime” market move, I stop listening. They are wrong and I do not have the time to explain to someone who has that point of view. If the market is open it can happen.
Possible reasons for frequency.
By eliminating people, ie market makers and trading pits, we are susceptible to volatile moves. Those people offered some stability. Removing market makers made the market more efficient in terms of the bid/offer spread. What I believe is happening is the market has the same inefficiency/efficiency it just is not spread out as far. From a futures standpoint, it made the market trade to a price not at all prices. It is putting people in painful situations and many moments of uncertainty. Forcing many people to take suboptimal exits. Also, there are just less people. It takes less money to move the market. The crowd is dispersed and the money is concentrated.
How to prepare
I was given the gift of observation which makes it easier for me to recognize patterns. Pattern recognition means nothing with cognitive flexibility. Cognitive flexibility allows me to take what markets gives me. Time has taught me patience. Budget has given me even more time.
Am I really prepared for a “once in a lifetime” event? May be not but I am not naive enough to think it can’t happen again.
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