INVESTING in a turbulent, up and down, crazy market can be a real challenge. In fact many investors go to the sidelines and simply wait out the crazy times rather than risk losing their money. But this doesn’t have to be the case. When markets are bouncing up and down rather than moving steadily upwards with occasional dips this can be scaring but still be very profitable if you follow a few key principles – and even these principles have a few options.

First, remember it is critical to keep your emotions in check. Don’t succumb to selling or buying that is not based on hard facts. And the facts should relate specifically to your investment strategies and to particular ticker symbols.

Second, keep your time frame for managing your portfolio. If you examine your portfolio weekly don’t succumb to making mid-week or daily decisions because this requires different strategies and concepts that won’t fit either your existing strategies or your time frame. In other words you can set yourself up for failure and losing money by switching horses’ mid-stream. If you want to react more frequently to the market then you should develop, if you haven’t already, strategies and concepts that work best when daily trading is a potential. You can use the same groups of ticker symbols that you prefer to watch but now your buy/sell rules will be different and designed specifically for up/down markets.

Third, be willing to spend a little more time and perhaps expand your analysis. If your weekly method, for example, is to have a program compute and give you recommendations based on technical analysis, perhaps you should look at a few charts to see if they confirm holding or buying particular positions that you have or are considering. If you already look at two charts, maybe you should add a third chart to see what it indicates. In other words, in turbulent markets exercise a bit more caution on the safety side when making your decisions. Myself, I like looking at moving average and full stochastic charts, and sometimes I also look at a relative strength crossover chart. Fourth, take a more frequent look at an overall exit signal that can tell you when to stop trading and either put your money in a money market or savings account, or perhaps an ETF for bonds. A good exit signal can be based on an equity curve, as discussed by Michael Carr in his book, “Smarter Investing in any Economy”. In essence an equity curve is when you set both parameters of a moving average chart to the same time frame.

There are two basic types of equity curves. One type is based on the total return of your group’s strategy, while the other is based on an index like the S&P 500. I actually look at both of these, an equity curve for each of my individual strategies and an equity curve for the market as a whole based on the S&P 500 index. When the markets are in a general upward movement setting the moving average parameters at 250 each works well. But when the markets are crazy turbulent I set the parameters at 100 each. With equity curve in place an exit signal is easy to see. Quite simply, with this technique, when the price line of the strategy or the index cuts down through the smooth equity curve line it is time to either stop using that strategy or get out of the markets. Thus the key to trading and investing in turbulent market conditions includes a steady, unemotional course and to follow good signals, perhaps look at one or two new signals, but not to be afraid to invest unless you see a an absolute exit signal.

Protecting your investments, your money, is a basic element of safe investing. Taking action before your investments are at risk is the key to not just a conservative investment strategy but to any investing.

Unless you are a day trader, which most of us are not, your investments are at risk to sudden events, calamities caused both by nature or man, actions by politicians or even sudden bad news about one of the companies or group of companies with which you have placed part of your financial future? Such events that could send your positions tumbling include:

Acts of war
Acts of terrorism
Natural calamity such as an earthquake
Politicians playing with economic policies
Sudden news from a company
While many software programs can tell you when to buy or even when to sell, the challenge that affects most of us is what do we do to protect ourselves without having to watch the markets every hour or even every day? What can we do when all we want to do is manage our investments once a week or even just occasionally? In other words, is it even safe or practical for most of us to be investing in the markets? And what about our retirement accounts? One method is to always play it safe and confine yourself to