A Simple Strategy for Making Money on the Shanghai Index

Anyone familiar with stock trading knows that during market crashes and various crises, you can not only lose money but also make a good profit.

Many outstanding traders made their fortunes during stock market crashes, as this is when they can buy assets at the most attractive prices.

Bad news crashes markets, and stocks and other securities plummet, hitting rock bottom.

But this situation typically doesn't last long; bears (those betting on the rise) begin actively buying up cheap assets, thereby increasing demand.

Due to increased demand, prices begin to rise again, and those who bought securities at rock bottom prices begin to profit.

It is true that it should be taken into account that the price almost never rises to the initial level and therefore it is better to close the deal while the security regains half of its lost value.

Using such a strategy, all that remains is to wait for the next collapse in the stock market.

Current situation on the Chinese stock exchange

Let's examine the current situation on the Chinese stock exchange using the popular Shanghai Composite Index as an example. It represents the prices of over 1,000 Chinese stocks and perfectly characterizes the situation on the Chinese stock market.

Following the onset of the coronavirus pandemic, most analysts began offering bleak forecasts for the future of the Chinese economy.

These statements resulted in a more than 8% decline in the Shanghai Composite Index, from 3,060 to 2,700.

After the Chinese government announced it would support the stock market by injecting $173 billion into it, the price of Chinese stock indices began to rise.

It's doubtful that this amount will be enough to significantly impact the situation, given that China's stock market capitalization is several trillion dollars and the pandemic is still only gaining momentum.

Therefore, there's every reason to predict a further decline in Chinese stock prices.

The best time to buy will come after the first reports of the end of the coronavirus epidemic or the emergence of a reliable means of combating it.

This is when you can enter into long trades on the Shanghai Composite and profit from its rise of 3-4%, which, given leverage, is quite significant.

The current situation offers a good chance to make money even for a novice trader who isn't yet well versed in the intricacies of technical analysis.

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