As 2018 comes to an end, the world sits and shivers at the current economic status as we await another financial crash.
The world experienced its first economic collapse back in the year 2000 after the internet was introduced to all. People began investing in every company they came across, regardless of the companies capabilities, future, or profits, telling themselves that one company has to eventually make it, hoping that they were invested in the right one.
The bubble that the generation slid themselves into could be detected already in early 1997 with the sudden peak in the markets and a nonstop rise for 3 years, until they couldn’t any longer and came crashing down in the year 2,000.
After about 3 years of a total economy crisis, the markets began to stabilise as America picked themselves up and re-secured their future.
The second crash that the world experienced and is very familiar with is the SubPrime that occurred in 2008. The cause for this crash was largely blamed on too much borrowing and a flaw in the financial modelling which had the assumption that that home prices only go up. With much greed and fraud involved too, the economy could no longer stand at the expected levels and all fell apart.
During these times, an index called S&P 500 VIX, also known as the fear index, can be seen to rise to incredible heights. This index serves almost like a panic meter and the stress of the economy can be sensed through this asset. Back at the end of the 1900’s the index reached an incredible height of 44.28 dollars per share, which was the highest the VIX index had reached for many years, up until the SubPrime crash in 2008 with which the asset reached an unbelievable market price of 59.89 dollars per share.
Looking at the VIX index just this year, we can see that there truly is a pattern in the markets. Every 8-10 years the markets need a fix, and it seems that they will stop at nothing to be rebooted. VIX has shown us multiple times this year that economy is on its way down, hitting a height of 37.32 in February, which also happened to be the same time that Trump had threatened for the first time a trade war – not a coincidence.
But as the year comes to an end, the asset has risen and fallen drastically, from being as high as 25.18 on 24/10, dropping to 16.38 only 2 weeks later, and building its way back up to 21/22 dollars per share.
How can you save yourself from being affected?
A few ways to steer clear of this crash and save yourself is with automated trading. Automated trading has the ability to open trades on the rises and falls of the market, making every opportunity a profitable one. When a tsunami comes upon the people, the only survivors are the ones on boats in the water, and that’s how we choose to see automated trading during these times. Software’s such as CW live on the water waiting for the tsunami to hit, we choose to play it safe with a low-risk percentage, a safe asset to trade over, and an award-winning, self-learning software, keeping ourselves protected from the dangers of the markets.