[fusion_builder_container hundred_percent=”no” equal_height_columns=”no” menu_anchor=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” background_color=”” background_image=”” background_position=”center center” background_repeat=”no-repeat” fade=”no” background_parallax=”none” parallax_speed=”0.3″ video_mp4=”” video_webm=”” video_ogv=”” video_url=”” video_aspect_ratio=”16:9″ video_loop=”yes” video_mute=”yes” overlay_color=”” video_preview_image=”” border_size=”” border_color=”” border_style=”solid” padding_top=”” padding_bottom=”” padding_left=”” padding_right=””][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” border_position=”all” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” center_content=”no” last=”no” min_height=”” hover_type=”none” link=””][fusion_text]I’ve experienced a good amount of bear markets in my years of trading and I’ve made some observations that have helped me to make nice profits from them. So without further ado, here are 5 things every trader should know about bear markets:
#1: There is no such thing as a breakout in a bear market, so don’t bother looking for one. For a stock to get vertical, you need to have emotional chasers. Plus, buyers will remove bids when indexes go south. Are you ready to buy stocks at -300 on DJIA? Me neither.
#2: BTFD (Buy the F’ing Dip) is as mythical to the human trader as a magical unicorn. *Oh wait, that’s real.* Trading is the only business in the world where nobody wants to buy when things are on sale.
#3: The idea that a stock can be oversold is often false. The price of a stock is where it was last traded. In 2000-2001 $GLW was at 300. It went to 250 and everybody said, “Wow, great buying opportunity.” Then it went to 200 and it was, “Man, what a gift.” When it got down to 110 you’d hear, “All the weak hands are out. No way it breaks 100.” $GLW closed at 30 today. Let us pray.
#4: Shorting stocks is not illegal. You are not the antichrist if you do it. God gave you 2 hands, 2 feet, and 2 eyes. The Market Gods gave you 2 sides of the market, so make sure you use both of them. We are not bulls or bears — we are mere speculators. Stocks take the stairs up and the elevator down, so the most aggressive profits are when gravity kicks in. It leads to thinner bids and exaggerated moves.
#5: Sitting on your hands is a proactive action. However, if you’re an active market participant then the act of sitting on your hands is a crutch for lacking a solid process. Sure you want to protect capital but don’t you try to do that during a bull market as well? In 2000, the dot.com era provided a once in a lifetime opportunity and yet 80% still made pennies. The ranges in a bear market are phenomenal and you can take advantage of them. Sitting on your hands won’t pay the bills — it will just make your hands stinky.
There’s no #6, but I do want to say one more thing. If you’re still impressed with the random avatars on social media because they can draw pretty charts and have cool catch phrases then your expiration date is coming — you just don’t know it yet. You are a superstar. You are a must-follow. Take control. Tomorrow is the first day of the rest of your trading career — time to be great.
Surviving bear markets is ultimately all about your process.[/fusion_text][/fusion_builder_column][/fusion_builder_row][/fusion_builder_container][fusion_builder_container admin_label=”” hundred_percent=”no” equal_height_columns=”no” menu_anchor=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” background_color=”#074b6b” background_image=”” background_position=”center center” background_repeat=”no-repeat” fade=”no” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ video_mp4=”” video_webm=”” video_ogv=”” video_url=”” video_aspect_ratio=”16:9″ video_loop=”yes” video_mute=”yes” video_preview_image=”” border_size=”” border_color=”” border_style=”solid” margin_top=”” margin_bottom=”” padding_top=”10px” padding_right=”” padding_bottom=”10px” padding_left=””][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”2_3″ spacing=”” center_content=”no” hover_type=”none” link=”” min_height=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” background_color=”rgba(255,255,255,0)” background_image=”” background_position=”left top” undefined=”” background_repeat=”no-repeat” border_size=”0″ border_color=”” border_style=”solid” border_position=”all” padding=”20px 60px 20px 60px” margin_top=”” margin_bottom=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” last=”no”][fusion_text]
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