Friday, December 19, 2008

>Day Trading in Bear Market

Day trading is something which excites and attracts everyone especially young ones.
Ask any seasoned Trader and he would be of the opinion, Day trading is fascinating
but equally dangerous .It becomes disastrous if the risk is not defined in a particular
trade.

Day trading to many is adrenaline rush,When a particular trade goes their way
Well it turns out to be equally depressing when trade goes against them.

Day trading requires a set of qualities and strict rules which need to be
followed
to show fruitful results.

Qualities would include, A trader need to be energetic,Good reflexes and a quick
decision maker and lastly the most important one "Concentration".

These qualities are usually seen in young traders (25-35) age group.

Concentration is something which comes by practice many try meditation to
get a sound concentration.

According to a survey Good day traders are not Doctor's or Engineer's
they are
Pilot's.

Fine now different kinds of market requires specific set of tactics to try to break
Them up(To trade).
BEAR market poses the biggest challenge in front of traders.
As in Bear market there is a saying"Expect the unexpected".

Like in
Bull market they say no high is final high.

Bear market slogan is No low is final low:).

So to trade such market Trader need to change his trading style thinking etc
in short he need to transform himself to adapt to the conditions.

Like chameleon does by changing his color according to the background.

First and foremost rule never trade first breakout in a bear market.
The first breakout usually gets sold heavily.

Now here we have two methods Fellow traders can try both and see which one
serves them well:).

Either buy the next breakout or buy the first breakout retrace find a good support
retrace by using Fibonacci.

Secondly never underestimate the Bear market rallies if you cannot trade bear market
rallies avoid trading them, You may end up loosing most of your money what you made
by shorting BEAR market.Shorting BEAR market rally without any study or clues is
like trying to find water digging in desert . Whole 1 year return of a Bull market
can come in one month BEAR rally.

Of course big money is to be made when Bear rally ends.Timing plays an important role
Look for clues ,Chart patterns,Waves etc to come to conclusion.

Lastly the disheartening thing Bear market tends to see failure of many chart patterns
Waves etc which makes it tedious for a trader to find a trade setup out of
cacophony.

More ideas to follow in next post
Do leave comments about your experience about trading Bear market.

Regards
Rish


RESEARCH REPORTS

9 comments:

Achin Jain said...

Secular trend (any preferable but they love bear as that makes quick money as trade is quick) makes it more easy for new youngsters whereas experienced traders like it to be whipsaw type with lot of fluctions

Haridas said...

Very good article.

I found it is very difficult to take decisions in this bear market. As flectuations are too very high in bear market, Stop Loss method also not working!

rajv malik said...

excellent article.....yes trading in bear market is pretty tough.....
pl add me to your mailing list
rajivhtc@gmail.com

barbie said...

Day trading in bear market is tough as well as dangerous but on other hand bear mkt provides many profitable opportunities which can be utilized fully with the help of proper stop loss which is possible with technical analysis
.... Thanks for guiding and sharing ur knowledge with us.

pulkit said...

Very good article n helpful to many traders. Rules of day trading to be made by individual by their own experience n style. Like i have made some always trade in 2 or 3 parts, focus on saving what u have rather thinking of big rallies, traying to squareoffing trade position at day high or low is nothing but the ego, dont overtrade when ur day is not there etc. Hope in ur next continuation article we will unwind so many tricks.
Pulkit

Anonymous said...

Focusing attention, the effective concentration or meditation makes one to understand the risk. To know WHAT is happening around? This is a complex crisis that has no parallel in our life, so your guideline is not too vague to respond to…the awareness that you imbibe, makes one to understand the crash or boom in perfect literature. Looking forward more and the best of your dedications…

Sagar

vijay said...

Hi rish ,

One of the best article from u...But I need to see how many of them who read will be successful by reading this article bcoz even I had lost lacs of rupees at the age of 24-reason being attracted by the return of a bull market-But eventually faught back and covered all the losses

Some things i believe to be true from my trading experience are

1.Concentrating on selected Liquid Stocks

2.Quick decision Making and discipline

3.And Always be Silent about your trades

jafo said...

day trading is the same whether in a bullmarket or in a bear market.....ie for a speculator

bull or bear has bearing only in the context of investing....also for those traders who only buy and sell

a speculator ie a trader who trades futures or option instruments or a daytrader who trades scrips both ways - does not have to be concerned about the bullish/bearish state of the market....the same set ups get traded except for the direction of the trade....

Rish said...

jafo, I have a different opinion trading style changes in different market conditions ,even while day trading too.Try to catch first intraday breakout in a bear market you will understand the difference or try a long after 4th wave for a fifth up target.That would show the difference between trading a bull market and bear market.

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