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How do you play a volatile market?

cnbc.com
Wednesday, 4 Apr 2007 | 12:26 PM ET
The floor of the New York Stock Exchange is seen as the final day of trading of 2005 begins, Friday, December 30, 2005.   Wall Street started its last trading day of 2005 with stocks sliding as investors gave up on the dwindling fourth-quarter rally and consolidated what profits they made this year.(AP Photo/Henny Ray Abrams )
Henny Ray Abrams
The floor of the New York Stock Exchange is seen as the final day of trading of 2005 begins, Friday, December 30, 2005. Wall Street started its last trading day of 2005 with stocks sliding as investors gave up on the dwindling fourth-quarter rally and consolidated what profits they made this year.(AP Photo/Henny Ray Abrams )

"Constant listening to business news, watching oil prices and keeping updated on business and international conditions. It’s a full-time, nerve-racking, high-risk, personal endeavor to keep your portfolio going up or sideways instead of down." -- John M.

"I'd like to invest in 'Rose Colored Glasses' ... everybody is ignoring all kinds of bad news and they still keep predicting a wonderful economy ahead. I think the market is skating on thin ice, out on a limb and is very dangerous at this time!" -- Lloyd C. Washington

"It's simple, it all goes back to hard work, dedication and fundamental picking of quality stocks and risk management by cutting your losses quickly. Most importantly, do not try to fight the market. Analyze the market and determine whether it is in an up trend or down trend. 75% of all stocks follow the market and even a salmon cannot go upstream against a strong enough current. No matter how strong of a stock you think you may have, if the market is in a downtrend, correction, or bear market, your risk of losing money is great - and a loss on 'paper' is still a loss, it has just not been realized yet. The value of your stock is worth what the market says it is. In conclusion, the way to play a volatile market is 1.) determine if the market is in an uptrend or downtrend - if it is in an uptrend, slowly get in the market, if it is in a downtrend, sell and get into cash, 2.) buy only fundamentally strong companies with a solid history of earnings and sales growth with good institutional sponsorship, 3.) buy these stocks only if they are coming out sound chart patterns, 4.) cut your losses quickly if your wrong. It's that simple. Yes, it takes work and some know how, but Rome was not built in a day and most things that are easy and free are just that - easy and free. Most people are just too lazy, unfocused or uncommitted to take their retirement or investments seriously and put in the effort and work it takes to get ahead. If you are not going forward, then you are going backward." -- Derek S., Tennessee

"I use the same strategy as I would any other time except I tighten up on my 'STOPS' to protect my gains and limit my losses." -- Robert M., Montana

"Volatility puts you on your toes. Volatility is needed by traders, dreaded by investors. Volatility brings on risk, risk can bring on potentially big rewards. When trading in a volatile market, it's not enough to look at the quote, you have to look closely at the size of the bid and offer, this gives you an idea of the supply and demand of bids and offers. As an investor if you picked good quality companies and they are not affected directly by any adverse news, just hang in there." -- Julian Z., New Jersey

"You have to be vigilant and keep watching the latest business and money news online and, if you’re lucky, you can keep CNBC TV at the ready for great analysis and tips. At the end of the quarter and during earnings reports, it is especially important to watch for a downward trend. If you are a long term investor, or like funds, you should pick those only stocks and funds with the best track records. You can also research the individual stocks in a fund so you can have a better idea of their performances. Research, research, research - whether you are long term or short. And keep a cool head. The news changes quickly." -- Angela H., Rhode Island

"When the market gets volatile I buy world wide companies that have a good track record with solid management teams that have been around for a long time. I think it also a good idea to buy the season for right now. I would buy companies that are in the commercial building business such as bridges and roads and companies that supply this business." -- Wolfgang R., Pennsylvania