Saturday, August 20, 2011

How to survive a bear market

from: This Blog

This is what characterizes bear markets:
  • Sellers are in control
  • Oversold often stays oversold for a long time
  • Markets drop a lot faster than they go up
  • Bear markets burn and churn accounts with long only exposure
  • Volume and liquidity can dry up but price can still drop significantly
  • ‘Cheap’ can get a lot ‘cheaper’
  • Hope is slowly destroyed
  • Vicious bear market rallies try to suck in traders to trap them
  • Expect lots of gaps to the downside
  • It takes a long time until market participants throw in the towel
This is appropriate trading behaviour during bear markets:
  • Either in cash or short
  • Sell the rallies mentality
  • Do NOT buy the dips
  • Do not even think about going long if you are not an active and experienced trader

3 comments:

amarjeet said...

respected sir,
please advice on hindalco.hindalco now its neckline if it breaks so horriable.i like hindalco, i am invested in it.

anshul said...

all the point fits in current situation of world and indian markets and it suggests that we r in trap of bear market

seeker said...

sir how do we know bar pyschology? Is there any books for bar psychology