9 Minute Read

Tackle Today: Why do markets crash?

November 21, 2019

By | No Comments

Tackle Today: Why markets crash?

« The four reasons. »

“Why do we assume that simple is good? Because with physical products, we have to feel we can dominate them. As you bring order to complexity, you find a way to make the product defer to you. Simplicity isn’t just a visual style. […] It involves digging through the depth of the complexity. To be truly simple, you have to go really deep.”

Jonathan Ive on “Steve Jobs” by Walter Isaacson —

Simplifying things is almost always the best way to understand them very well. Although the reasons why markets crash are too many to be listed on a daily email, let’s try to group them into four major categories.

  1. The obvious
  2. The hidden
  3. The technical
  4. The undetermined

1. The obvious

Let’s say any of the POTUS gets caught in a major corruption scheme, the biggest in the history of this planet, surpassing the Brazilian one from a couple of years ago, with about $2.5 billion misappropriated. We can’t predict the future but we can imagine the size of the sell-off.

2. The hidden

This is when something weird, gross and horrifying is already happening but only insiders know. Think about the 2007 housing market crash, the LTCM collapse or the 9/11 terrorist attacks.

3. The technical

A major support level is broken. Robos, algos and us, mortal traders, start the sell-off with stop losses getting triggered, spreading like wildfire.

4. Undetermined

This is the hardest one and we have to ask the specialized media WHY. They have answers for everything.

Regardless of the reasons, the same techniques apply to all of them:

  • Invest in Financial Education
  • Master portfolio design
  • Master position sizing
  • Master risk/reward
  • Buy portfolio insurance
  • Buy a vault
  • Buy gold

Chart of the Day

Holy Target!

Target (NYSE: TGT)

After the earnings announcement, Target (NYSE: TGT) just took off. From the close of the previous day to yesterday’s close a +14.05% difference. From the open of 2019 a +94.32% increase in price. Holy Target!

Video of the day

Trading Concept Check: What is a target

Profit-taking is a rudimentary part of active trading, learning to take profits, scale-out, trail stops and otherwise lock in gains are essential skills all traders need to master.

Traders Lounge 11 PM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

Cashflow Club 8:30 PM EST

Held every Thursday before Friday’s option contract expirations, this show helps you perfect your favorite cashflow strategies.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.

Tackle Trading: Financial Freedom is a Journey. Sign up now for a 15-day free trial.

Financial freedom is a journey

The Tackle Today series is brought to you by Tackle Trading.

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.

# Sign up now for a 15-DAY FREE TRIAL #

Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.

Chart Modal

Tackle Trading

Book a FREE Consultation

Sign up for a free consultation to build your Educational Plan.