What are the characteristics of bear markets?
1) Downward trending movement of almost all stocks.
2) High volatility. Huge Gaps and fierce intraday movements.
How to survive in bear markets?
As investors, take out money from all your stocks to hold cash and wait till the bear market has ended. No point trying to catch the bottom.
For traders?
Manage your risk well is key. Bear markets have the sharpest rallies and the most huge downturns. They can catch anyone off guard and wipe out all your trading capital in an instant. So risk management becomes key here. My current plan is to keep my positions and exposure small.
What do I mean? Exposure means time spent having a position. I normally take only intraday positions and seldom have overnight positions. Positions are kept small to minimise losses. Tight stops will also help. I do not need to trade large positions as volatility is big and a move in the correct direction can yield very large profits even if position is small. Tight stops helps me to manage my risk to enable me to take my positions with confidence knowing the maximum amount I can lose.
1) Downward trending movement of almost all stocks.
2) High volatility. Huge Gaps and fierce intraday movements.
How to survive in bear markets?
As investors, take out money from all your stocks to hold cash and wait till the bear market has ended. No point trying to catch the bottom.
For traders?
Manage your risk well is key. Bear markets have the sharpest rallies and the most huge downturns. They can catch anyone off guard and wipe out all your trading capital in an instant. So risk management becomes key here. My current plan is to keep my positions and exposure small.
What do I mean? Exposure means time spent having a position. I normally take only intraday positions and seldom have overnight positions. Positions are kept small to minimise losses. Tight stops will also help. I do not need to trade large positions as volatility is big and a move in the correct direction can yield very large profits even if position is small. Tight stops helps me to manage my risk to enable me to take my positions with confidence knowing the maximum amount I can lose.
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