There are many ways what you can do when market is falling. You could probably find advice on selling your positions and go sideways, buying more stocks, do nothing etc. Well it is all about strategy.

I remember myself when I was trying to figure out which way to go. Originally I used a strategy of selling stocks which hit my stop loss. Unfortunately during markets like today I was stopped out quite quickly. I ended up collecting losses. One after second.

I was thinking what I can do to prevent it. What strategy would be the best? Which would work for me?

Well, it is all about strategy.

With a small account like mine I couldn’t afford swing trading or timing the market. Although I still believe in this strategy as good one and I still believe that it is possible to time the market. But timing the market will increase trading frequency and also you may pick up more wrong stocks or wrong timing. With a small account you cannot afford it. That was my lesson.

So I must hold stocks longer. I must pick and buy stocks, which won’t be that volatile and which will hold value better than small caps. Besides some other reasons, this one was the one why I chose dividend paying stocks.

But what to do when the stock market is falling and almost all your holdings go south? First don’t be panicking. Mr. Market is once again having bad mood and overreacting. Based on the strategy he is actually creating a great opportunity for buying.

For me it is an opportunity. As I mentioned in my previous post I try to teach myself to stay calm, when the market is growing and get ready when it is falling. Watch your investments and save money. You may reinvest dividends or invest new savings into slowly growing stocks during long term strong bull trend, but during volatile market like today I am just saving and sitting tight. Now when the market is in correction I am preparing to act. I was waiting for Kinder Morgan stock as I said in my previous post, but I have bought CTL instead. CTL showed better results to me, better dividend yield, growth and other numbers I look at. Now, after I purchased CTL I am again waiting for KMP.

When I first mentioned KMP it was trading at $75.84. Today, a few days later KMP closed at $72.09. Given the size of the company, industry it operates, services it provides and dividends it pays this stock doesn’t look as a bad investment to me. Buying it cheaper is a great opportunity.

When the market or the stock shows strength again I will buy and add this stock to my portfolio. If the market continues growing, I will be saving money again for another buy opportunity.

How do you invest or what you typically do when the market is growing or falling?