How do frequent market fluctuations impact active investment strategies?

Frequent market fluctuations compel active investment strategies to engage in constant trading to capitalize on short-term price movements. Active investors aim to outperform the market by frequently buying and selling securities based on market trends and fluctuations. When the market is volatile, opportunities arise for active traders to adjust their positions, hedge against downturns, or take advantage of undervalued assets. This continuous monitoring and trading are essential for maintaining a competitive edge over passive strategies, which typically rely on holding investments for the long term without extensive trading. Thus, the nature of market fluctuations directly influences the behavior of active investors, making ongoing trading a critical component of their strategy.