Points to know
- Trading volumes are high during volatile markets.
- Volatile markets can delay executions of trades.
- Don't let emotions override the decisions you made for your long-term financial plans.
Volatile markets are extreme and unpredictable. They're characterized by:
Under these conditions, stock prices can change quickly and dramatically. Real-time quotes can lag behind actual market movements.
When you're placing trades in volatile markets, keep these points in mind:
Your order may execute at a price significantly different from the quotes displayed when you entered your order.
Placing a limit order allows you to set an upper or lower limit on the amount you're willing to pay or accept for a stock. There's no guarantee your order will execute.
Because of heavy trading volume in a particular security or the market overall, you may not be able to place an order electronically or you may have difficulty reaching an investment professional by phone.
KEEP IN MIND
It's tempting to want to do something when markets are volatile. But that's exactly when you shouldn't act on emotion.
Take a step back and think about your long-term goals and asset allocation. Don't let the day-to-day market noise send you off course.
If your reasons for investing haven't changed and you have a diversified portfolio of stocks, bonds, and cash investments, doing nothing is usually best.
The trading of a universe of investments, based on factors like supply and demand. For example, the "stock market" refers to the trading of stocks.
An order to buy or sell a security at a specified price (limit price) or better. The execution is not guaranteed.
Stocks, bonds, money market instruments, and other investment vehicles.
The way your account is divided among different asset classes, including stock, bond, and short-term or "cash" investments. Also known as "asset mix."
The sum total of your investments managed toward a specific goal.
An investment that represents part ownership in a corporation. Each share of stock is a proportional stake in the corporation's assets and profits.
A loan made to a corporation or government in exchange for regular interest payments. The bond issuer agrees to pay back the loan by a specific date. Bonds can be traded on the secondary market.
Very short-term investments—such as money market instruments, CDs (certificates of deposit), and Treasury bills—that mature in less than one year. Also known as cash reserves.
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