Most "traderz" get started when a bull market is in full swing. Their "skillz" rapidly become over-rated in their own minds, so they are completely unprepared for a bear market.
Their "skillz" include buying on dips and catching falling knifes.
After all, these "skillz" worked in the bull market.
Their "skillz" do not include playing the short side of the market.
But what about those that get started during a bear market? In my view, one of the very best things about a bear market is that incorrect trading behaviour very rapidly leads to negative consequences. This is not always the case in a bull market.
Everyone can get themselves in a position to take advantage of this trueism. It's STAYING in that position that's the hard part.
in a position to take advantage of this trueism. .
STAY in that position
As Michael opened this thread I was hoping he may have been able to add more than generic input.
Michael simply states
I agree BUT
90% of people here including myself know how to cut losses and let profits run.
But when you find yourself in Drawdown 18% (On a sizable account) and slowly bleeding to death--I'm interested in what others have you done (Practically) or found thats made trading profitable again for you?
Around 2 mths ago I stopped trading.
I was bleeding to death and paying handsomely for the privilage.
I identified what it was that I was doing day in day out and expecting a different result and I know I'm not alone!!---then what needed to be done to correct it. So I could implement the "cut your losses/let your profits run"---without bleeding to death.
Putting myself
I found 2 fundamental errors--frankly very dumb stupid errors.
That also allow me to
But before I put up my findings I was hoping for some from others particularly Michael.
It maybe that as a systems trader Michael has no input for those trading in a discretionary manner.
However I will say what I have found applies to all.
Much easier to apply for discretionary traders though.
Its certainly working with 2 trades 12 days old pulling back 14% of that drawdown.
My question is, if you were trading a system that has a positive expectancy, which no doubt you would have been, at what point and why do you stop trading?
In the end it takes a stick of dynamite to make us sell at times.This is a really interesting point IMO, because ´traders ´ just trading off TA, miss the really undervalued stocks that were frequently identified by the likes of YT and get their few % gain here and there. I saw YT make quite a lot of money from picking undervalued stocks and then jumping out as they came close to his interpretation of fair value. Or a suitable gain, whatever that was. Perhapsd up to a FA or TA level. There is a case for picking fundamentally undervalued stocks and then playing them by TA, to make quite a good deal out of the market. But as MichaelD, tech, and others (sorry to leave a good trader out) keep telling us, it ´s the selling and money management that keeps you in the game, especially at a time like this. Selling is almost like putting in golf. Buy for show and sell for dough...
Sorry if that didn ´t make any sence...
Become a better trader?
May be the problem is the timeframe that we are trading, not that our "setup" has stopped working, or does not have enough trades to make it work, gets stopped out frequently etc, etc
In times like these, as a trader, we should operate in the arena that offers frequent opportunity to trade our preferred setup and offer an acceptable return.
Remedy?
Move down a timeframe (or more), you may be pleasantly surprised with the opportunities that become available
The problem then may be that your average profit is much smaller than usual, but we can only have what the market offers and be grateful
Always checkout the underlying structure of your intended stock (Elders Triple Screen - multi timeframes)
Be patient
Only select trades which you are most comfortable with (having a high probability of success)
Be consistent
You don't have to trade every hour/day/............
Its your money thats at risk
ALWAYS TRADE IN YOUR OWN BEST INTEREST
Peter
Having read a lot of posts on this thread. I find, that most of the theories fall flat when almost every stock in the market tanks.
What is your theory of investing as there becomes a greater need to short?
Of course you have to trade a bear market. Investing becomes a dangerous game, as you said yourself, you need to short. If even to hedge broader market risk.
As BBand says, high frequency, shorter term trading.
Though Michael disagrees and uses a trend following system, but not sure how large the profits would be if this bear market lasts a couple years or more........
Canaussie, if you have success trading EOD, then you can trade intraday. Just use something like IB, which has fast execution speeds and low comms. If you have to work, trade Europe afterwards etc..........
Become a better trader?
May be the problem is the timeframe that we are trading, not that our "setup" has stopped working, or does not have enough trades to make it work, gets stopped out frequently etc, etc
In times like these, as a trader, we should operate in the arena that offers frequent opportunity to trade our preferred setup and offer an acceptable return.
Remedy?
Move down a timeframe (or more), you may be pleasantly surprised with the opportunities that become available
The problem then may be that your average profit is much smaller than usual, but we can only have what the market offers and be grateful
Always checkout the underlying structure of your intended stock (Elders Triple Screen - multi timeframes)
Be patient
Only select trades which you are most comfortable with (having a high probability of success)
Be consistent
You don't have to trade every hour/day/............
Its your money thats at risk
ALWAYS TRADE IN YOUR OWN BEST INTEREST
Peter
In a bear market there is always the danger of going back in too soon. The warning signs are in the falls in major stocks even though they have booming profits and piles of cash. I suppose it's panic and forced selling that plays a major part.
Woodside Petroleum were under $1 a share in the early eighties and many got out in a panic. Were they right? I think we all know the answer.
Canaussie, if you have success trading EOD, then you can trade intraday. Just use something like IB, which has fast execution speeds and low comms. If you have to work, trade Europe afterwards etc..........
To my solution
Looking back on all my trades it became obvious--to me at least what was wrong.
I firstly needed to trade medium term as that is the smallest timeframe time allows me.
(1) I wasnt in sync with the index and the stock I was trading,and by index I dont necessarliy mean the XAO.
(2) I wasnt waiting for the trade to come to me. I was forcing a trade before it was ready. Not a problem in longerterm trading but shorter it was a killer.---whipsaws---and slippage on stops.
Everything else remains the same (re analysis). Entry in the longterm has little relevance but in the shorter term can bleed you to death.
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