subject: Trading In A Bear Market: How To Avoid Being Eaten Alive By The Grizzlies [print this page] Trading In A Bear Market: How To Avoid Being Eaten Alive By The Grizzlies
Are you searching for methods to be successful when trading in a bear market? Trading in a bull market is simpler than trading in a bear market. Many traders discover they can make cash trading in bullish markets, however when there's a major correction happening or when the market is bearish, they in a literal sense freeze and are not able to trade in a successful way or discover profits in their trading.
First, when a market has collapsed, it's critical to just accept the fact that the market trend has changed from bullish to bearish. It is human nature to locate scapegoats or to locate a "reason" or to reason away the proven fact that the market trend has changed. However unless the trader accepts the fact that he is exclusively accountable to trade his way out of a bearish market, he will discover his position unsustainable and discover losses that add up each day as the market bearish feelings continue. So how can you be successful when trading in a bear market?
It does not be of any benefit to discount the accountability of your own trading action and put the blame on your broker or your friend who has presented you the "ideas" that led to your losing trades. If you're confronted with losing trades from a swift disintegration in share prices, acknowledge that it is your onus to now institute action to get from this situation with profitable trades. In the second place, while in bullish markets it is easy to trade by just purchasing stocks that are in initial outbreaks and just retaining them and returning back once more after a couple days to garner profits, you cannot do the exact same throughout bearish markets.
Within bullish markets, you trade with the trend, and so long as the trend is increasing, you stand to make simple profits. Quite the opposite, in bearish markets, the market goes into consolidation, and trends are "shorter" in duration or the market will go into a sideways direction, with prices oscillating between ranges. Throughout bearish markets, we are more favored towards range trading instead of trend trading. So if you don't know how to change from employing trend trading to range trading, you can be fixed with short term trend alterations and suffer whipsaws and lose money trend trading throughout bearish markets.
Managing traders who have gone through a succession of major market corrections since 1987 has led me in concluding that there is no space for halfhearted trading throughout bearish markets. The margin of error for a trading signal is way lower when trading in a bearish market.
I actually have seen traders who are able to speedily transform or adjust from extended trend trading to trading shorter swings within the market or range trading to have the ability to create money from their trades. In bearish markets, they are contented with slighter profits, however trading more often and in higher volumes. To assist in their margin of profits, they can negotiate the lowest brokerage terms achievable with their brokers or to use discounted on the internet trading platforms.
Trading In A Bear Market: Summary
In bearish markets, the stock trader who range trade is going to be the one who is most beneficial placed to take advantage of the shorter and quicker rebounds that occur as stocks get oversold and retrace upwards. Taking personal responsibility and adapting to range trading will increase his possibilities to make money throughout bearish markets. Follow the points previously mentioned and you will have a far better chance of being successful when trading in a bear market.
