Can money be made in bear markets if you aren't shorting?

galumay · 16 October 2014

Smurf1976 said:
There's also the opportunity that a bear market creates for long term investment once it's over.

Absolutely, its a fantastic opportunity for long term investors, I hestitated to mention it because the discussion seemed so focussed on trading from the OP onwards.

darkhorse70 · 16 October 2014

Smurf thats what I was thinking. I was looking at how long bear markets on average last for so I could hop on after. I think the 08 GFC was only 1 year till the bottom. Im sure an oppurtubity or two would be present over a bear market.

>Apocalypto< · 16 October 2014

darkhorse70 said:
Long story short, my brokerage account does not allow to me to short. I don't fancy going against the trend and if a bear market was to come into action, is there any companies who still continue to go up.

I don't really want to go into very short term trades, like hours. Just to much stress for me personally and I dont have live feed.

So the question is, does that mean you have to wait on the sidelines till the markets turn again? I find it hard to believe that a stock would continue to climb while the rest of the world is collapsing.

writing Call Options.
Buying Put Options

Options are a whole new thing tread carefully.

skc · 16 October 2014

Some potential approaches from an old thread on the same question.

skc said:
- Buy put options
- Sell call options
- Buy inverse ETF
- Buy VIX index/ETF
- Buy commodities unrelated to overall market
- Buy treasury bonds
- Buy $USD or JPY
- Pairs trade arbitrage
- Buy short term rallies

darkhorse70 · 16 October 2014

Thanks apocolypto/skc. Maybe a good time to start understanding those other tools.

Julia · 16 October 2014

darkhorse70 said:
I was looking at how long bear markets on average last for so I could hop on after. I think the 08 GFC was only 1 year till the bottom. Im sure an oppurtubity or two would be present over a bear market.

OK, so how would you determine an entry point, having ensured that a bottom had been reached?

And on this:

could put on a 30c stop loss below and aim for $52/55 in the hope that the market would bounce for a day or two.

When you exclude the word "hope" from your trading/investing vocabulary, you will be getting somewhere.

darkhorse70 · 16 October 2014

Julia, id wait for a confirmation after the trend had clearly changed/reversed. Then id wait for clear changes in the trend of stocks and hop on once some clear level had been indicated. Obviously you would have a heap of resistance on the way up etc.

I say hope in the sense that nuthing in this endevour is certain. Not on any one particular trade anyway. It can go both ways no matter how much you analyse the trade. I didnt mean close your eyes and take a shot in the dark or cut corners etc and hope for the best.

Julia · 17 October 2014

Thanks for clarifying, dh. Good luck.

Trembling Hand · 17 October 2014

darkhorse70 said:
Mate, I was just giving a random example loll. To be honest my thought was, it would most likely go down by atleast a dollar and go up by most $2 ( MOST likely). That R/R isnt something id go for. The only way it would work was to be very tight on the risk for example 30c. For that to occur id have to watch the tape like a hawk and as I said I dont have life feed to see what going on woth the market plus the stock.

My point was that with a $7000 account and a volatile $50 stock you will not be able to position size any amount that will make it work on an EOD trade.

darkhorse70 · 17 October 2014

No problem Julia.

I think I get what you're saying TH. I understand I dont have the capital to buy a large enough position if thats what you mean? I dont think ill plan on trading short term. With my anxiety and all I dont want to be an emotional wreck while I trade.

And If I did want to trade EOD it would have to be in the aussie markets. I need my sleep lol.

darkhorse70 · 17 October 2014

Care to expand with an example so it has some educational value?

tech/a · 17 October 2014

darkhorse70 said:
Care to expand with an example so it has some educational value?

Risk 30c
2% 7000 = $140
That's 467 shares. @ $50 = $23,350 (Using your margin)
Say price rises 30c by close (EOD) That's $140
less brokerage
tax 35% say You made $91 approx.

This is the correct way to us margin
You don't have $23,350 but you are not taking on a greater Risk than the trade below.

Now take a $5 stock
same risk 2%
467 stocks @ $5 = $2335
Stock rises 30c ---etc blah blah

Same figures as above.
Better bang for buck but UNDERCAPITALISED.

DJG · 17 October 2014

Dont mean to burst your bubble but before you worry about shorting and Twitter - figure out your plan!

This was less than a day apart.

darkhorse70 said:
I don't really care about fundamentals or recent news. As long as im not in front of the earnings day, I just assume that most of the news has been factored in.

My plan was to aim at 66$ but as I said the mentioned thing about TWITTER about entering in at 50$ in this current trade was a quick short term trade.

darkhorse70 said:
I think I get what you're saying TH. I understand I dont have the capital to buy a large enough position if thats what you mean? I dont think ill plan on trading short term. With my anxiety and all I dont want to be an emotional wreck while I trade.

And If I did want to trade EOD it would have to be in the aussie markets. I need my sleep lol.

skyQuake · 17 October 2014

tech/a said:
Risk 30c
2% 7000 = $140
That's 467 shares. @ $50 = $23,350 (Using your margin)
Say price rises 30c by close (EOD) That's $140
less brokerage
tax 35% say You made $91 approx.

This is the correct way to us margin
You don't have $23,350 but you are not taking on a greater Risk than the trade below.

Now take a $5 stock
same risk 2%
467 stocks @ $5 = $2335
Stock rises 30c ---etc blah blah

Same figures as above.
Better bang for buck but UNDERCAPITALISED.

Would work better with a CFD provider, since IB is screwed for stocks atm.

Also part of your edge darkhorse is your ability to trade stocks without making waves - you can get in and get set while whales are still scrambling around for liquidity (and likely to do so for the nxt hr)
This is especially true for mid tier US stocks, where there is no opening auc and stocks don't gap around as much. They tend trade (thinly) to get to 'fair value', whereas bigger caps have pre-market trading and open at 'fair value'

tech/a · 17 October 2014

skyQuake said:
Would work better with a CFD provider, since IB is screwed for stocks atm.

Also part of your edge darkhorse is your ability to trade stocks without making waves - you can get in and get set while whales are still scrambling around for liquidity (and likely to do so for the nxt hr)
This is especially true for mid tier US stocks, where there is no opening auc and stocks don't gap around as much. They tend trade (thinly) to get to 'fair value', whereas bigger caps have pre-market trading and open at 'fair value'

For shorting yes.
figures were more the point.

darkhorse70 · 17 October 2014

Ok, I see tech.

I agree that im undercapitilzed for EOD trading TH, I wouldnt even consider EOD unless there is no other alternative. My account is at $8000 now haha.

Dangaff I was giving hypothetical situations. Ofcourse im going to always contradict myself. Im always learning and evolving. I do have a plan. Its not intra day but if it came to that then I would change my strategy. But do I curre tly want to engage in it? No.

Skyquake, I agree about the getting in and out quickly. Ill have to get some more confirmation I guess before I start to formulate a new plan.

Thanks

Can money be made in bear markets if you aren't shorting?

galumay

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>Apocalypto<

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Can money be made in bear markets if you aren't shorting?

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