A successful self trader – Rule # 6
There are actually two parts to this rule. Firstly, how do you identify a bear market from a temporary blip? Secondly, how do you make the best of a bear market? Both are easier said than done. But there are some basic characteristics of a bear market like reversal of leaders, lower lows and consistent negative breadth. But the question is; how to weather a bear market and also make the best of this difficult phase?
Understanding bear markets…
How exactly do you define a bear market? The most popular measure of a bear market is a 20% correction from the peak. Some analysts also define a bear market in terms of 3 months of consistent negative returns in the market. But in a way, bear markets are like the elusive temptress. They may be hard to define and delineate, but you can surely recognize one when you see them. Continue reading