All of this has happened before. Price action on the UK Index chart over the past 2 weeks might look unprecedented, but history shows that corrections such as these occur regularly and lessons learnt from past bear markets can help us spot tradable opportunities for the future.

I don’t even have to dig too far into the past for examples of a correction followed by a strong bounce in major London stocks. This October UK Index sell-off might feel steep, but only earlier this year, the blue-chip index fell 11% within 4 weeks. For more examples, read Mike’s blog from February and follow-up in March.

And everyone who watches the UK Index knows that what followed was a 2-month 15% rally to a new record high of 7903. Remember, corrections are a healthy market reaction to ballooning equity valuations and blue-chips which emerge at the end of this process will offer healthier and more rewarding investment opportunities for traders.

In turbulent markets, it is worthwhile reflecting on the words of famous investor Mohamed El-Erian in yesterday’s Financial Times (25 Oct): “It will prove hard for markets to avoid more volatility in the weeks ahead, [but … this] bout of volatility could end up being the journey to a destination where markets are underpinned by genuine fundamentals rather than distortionary liquidity.” 

Don’t get me wrong, I’m not calling the market low. Nobody can do that. And the February correction was followed by a smaller 7% leg down. But I am suggesting it is useful to remember that the current 9% correction should be seen as an opportunity.

Tradable opportunities appear all the time, in both Bull and Bear markets. There are plenty of options to benefit from stocks trading on negative momentum, that are breaking below key support levels, or those that are trading down within a range . If you are interested in any of those types of trades, get in touch with me to receive our daily tradable opportunities prepared by an in-house award-winning research team.

If trading in a falling market isn’t your cup of tea, but you are interested in making your financial assets work, the smartest thing you can do right now is set up the infrastructure for the moment when the Bear Run ends and the UK Index begins rebounding from current lows, back towards those record highs,

That rebound could start in a week, in a fortnight, or even next Monday. But before you trade, there are steps in between. Opening your account and familiarising yourself with the trading platform doesn’t take long, but it’s better to spend some time now sorting everything out. After all, things can move fast on the UK Index and you don’t want to get caught flat-footed.

Remember the old proverb: “Mend your sails while the weather is fine”? The ‘weather’ on financial markets might well be a bit choppy right now, but if you are feeling cautious and putting off trading until the markets stabilise, now is the best time to open a trading account and establish rapport with your personal broker.

When the moment comes and you are ready to take advantage of the tradable opportunities we send out every morning, day in and day out, all it will take is a single press of a button, or a quick call to one of our brokers to start trading.

Sam Springett, Senior Trader, 26 October 2018