# Other ways to make money when market is going down?



## grah33 (30 June 2015)

HI
I've been exploring ways to make money in markets while the  market is going down and i've been considering CFDS (for shorting shares).  There seems to be a lot of controversy about them, so still looking at that.  can i ask, what other equities/stocks/markets  and so on could one trade when the asx market is going down?  i don't work many hours (long story) so i'm really interested in finding ways to make money when our market is also going down and not just up.  or perhaps i should try IB and look for long trades for international shares (?).

also, any cheap but also good cfd brokers/providers that people can suggest for me?

thanks


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## tech/a (30 June 2015)

grah33 said:


> HI
> I've been exploring ways to make money in markets while the  market is going down and i've been considering CFDS (for shorting shares).  There seems to be a lot of controversy about them, so still looking at that.  can i ask, what other equities/stocks/markets  and so on could one trade when the asx market is going down?  i don't work many hours (long story) so i'm really interested in finding ways to make money when our market is also going down and not just up.  or perhaps i should try IB and look for long trades for international shares (?).
> 
> also, any cheap but also good cfd brokers/providers that people can suggest for me?
> ...




E minis

http://www.investopedia.com/university/how-to-trade-e-mini-futures-contracts/what-are-the-eminis.asp
Trade through IB

OR 

CFD's with all their issues.


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## CanOz (30 June 2015)

I don't trade FX, but there have been some great moves on the EUR.USD around the EU open. There are lots of mini currency futures contracts for these as well.

The thing that is on offer when markets are selling off is not just declines, but volitility. If you have the patience and discipline to work on a method, its these types of markets that can reward you the most, compared to what you risk.


CanOz


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## grah33 (30 June 2015)

keep the suggestions rolling.  i'll look in them.

ideally i want to be able to utilize the skills i got already - analyzing trends charts and volume

(i'm also curious to know if there are people out there who actually profit by shorting through cfds. it just seems so unpopular and risky and dodgy (from other peoples posts). also, i checked with IB, they don't allow australians to use CFDs, restrictions apply)


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## skc (30 June 2015)

grah33 said:


> HI
> I've been exploring ways to make money in markets while the  market is going down and i've been considering CFDS (for shorting shares).  There seems to be a lot of controversy about them, so still looking at that.  can i ask, what other equities/stocks/markets  and so on could one trade when the asx market is going down?  i don't work many hours (long story) so i'm really interested in finding ways to make money when our market is also going down and not just up.  or perhaps i should try IB and look for long trades for international shares (?).
> 
> also, any cheap but also good cfd brokers/providers that people can suggest for me?
> ...




I answered the same question many years ago. Do an advance serach on the forum.

One new addition to that list.

BEAR.AXW - the ETF that is the inverse of the market. So BEAR goes up when the market goes down. It's an ETF so it trades like a share and negates some of the downside of CFDs. But I have no idea about liquidity and spread and how accurately it follows (inversely) the market.


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## grah33 (1 July 2015)

skc said:


> I answered the same question many years ago. Do an advance serach on the forum.




search using which keywords? it didn't come up...


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## AlterEgo (1 July 2015)

grah33 said:


> keep the suggestions rolling.  i'll look in them.
> 
> ideally i want to be able to utilize the skills i got already - analyzing trends charts and volume
> 
> (i'm also curious to know if there are people out there who actually profit by shorting through cfds. it just seems so unpopular and risky and dodgy (from other peoples posts). also, i checked with IB, they don't allow australians to use CFDs, restrictions apply)




I have found too many restrictions with shorting share CFD's to be bothered with them. For starters, the number of securities available to short is fairly limited (top 2-300 on the ASX), and also when I have tried to short some I'd often have my order rejected due to "short sell limit excedeed". So now I just trade long, during all market conditions.

There's nothing dodgy about CFD's, as long as they are DMA, and only risky if you are using too much leaverage.


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## tech/a (1 July 2015)

You really only need to be very good at one thing.
So pick one and become super good at it.

*FTSE* is good for "L"plates at $16 a tick.
You can go long and short.
Doesn't trade like the DAX----but does comply
very well to technical analysis.
When you get really good (Cashed) just add contracts.


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## sinner (1 July 2015)

You can also buy some things that have low/inverse correlation with the market, the three most common examples would be:

* Options strategies which profit from transition from low to high dispersion, e.g. ATM straddles or VIX futures
* Long term government bonds
* US Dollar Index

Some slightly more obscure ones would be:

* Buy harder currencies than yours, e.g. Japanese Yen or Swiss Francs
* Buy Gold


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## grah33 (1 July 2015)

i'm still reading and reflecting on all these suggestions.  the products are confusing enough for a newby, but i'll work it all out.

true, i only want to do shares - just one thing as Tech suggested- but a cheap brokerage is also important at this point in time (certainly desirable).  so i'm looking.  not feeling good about shorting shares with macquarie (20$ brokerage to open a position i've been told).  perhaps IB does the london footsie cheaply ...


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## bonkerrs (1 July 2015)

tech/a said:


> E minis
> 
> http://www.investopedia.com/university/how-to-trade-e-mini-futures-contracts/what-are-the-eminis.asp
> Trade through IB
> ...



am i reading the investopedia on eminis right? a contract of the emini s&p500, in the example, is traded for around usd$66k  very out of reach for a lot of people if thats the case


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## Trembling Hand (1 July 2015)

bonkerrs said:


> am i reading the investopedia on eminis right? a contract of the emini s&p500, in the example, is traded for around usd$66k  very out of reach for a lot of people if thats the case





Thats the total value of the contract. You only need enough to sensibly cover margin. Which is around  $500 to $1000 per contract depending on broker. 

What dictates if you can afford to trade it is position sizing.


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## grah33 (2 July 2015)

tech/a said:


> *FTSE* is good for "L"plates at $16 a tick.
> You can go long and short.
> Doesn't trade like the DAX----but does comply
> very well to technical analysis.
> When you get really good (Cashed) just add contracts.




i take it you mean to trade the FTSE index itself, using cfds or what?


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## tech/a (2 July 2015)

grah33 said:


> i take it you mean to trade the FTSE index itself, using cfds or what?




The Index Future itself.
Not a CFD.


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## bonkerrs (2 July 2015)

Trembling Hand said:


> Thats the total value of the contract. You only need enough to sensibly cover margin. Which is around  $500 to $1000 per contract depending on broker.
> 
> What dictates if you can afford to trade it is position sizing.



Thanks TH.

Please help me understand... If starting with a $30k capital. Could you please provide an example of what might be a sensible trade of UQU5 (that's a S&P500 Emini Nasdaq 100 right?) And what the maximum risk with that particular trade?


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## grah33 (2 July 2015)

lots of technical terms here to get down my throat  


just wondering, as i've learnt about technical analyses for shares only, are the same analyses skills used in forex, cfds (dma based), futures and options and warrants?  when the market is going down and i wish to keep trading i might look for an instrument that utilizes the same analyses skills, so that's why i ask. the less to learn the better.


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## tech/a (2 July 2015)

grah33 said:


> lots of technical terms here to get down my throat
> 
> 
> just wondering, as i've learnt about technical analyses for shares only, are the same analyses skills used in forex, cfds (dma based), futures and options and warrants?  when the market is going down and i wish to keep trading i might look for an instrument that utilizes the same analyses skills, so that's why i ask. the less to learn the better.




There is a vast difference between " learning " Technical Analysis and applying it to turn a consistent profit.
In any instrument.

Options are a totally different ball game.

There are a number of different warrants linked to shares. Use a long term analysis of the underlying.
Never traded CFD's 
Futures have their own nuences and can comply well with analysis.
I would suggest you trade on sim until you can trade a profit for 6 mths.


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## Triathlete (2 July 2015)

tech/a said:


> There is a vast difference between " learning " Technical Analysis and applying it to turn a consistent profit.
> 
> *I would suggest you trade on sim until you can trade a profit for 6 mths*.




*Very wise words Tech/A......*

and adding my own rule 

*"Do not risk your capital if you are not sure you can succeed." *


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## grah33 (2 July 2015)

i've been using puny sized positions so i'm still good, and one of my stocks is going up, so i might end up back to 0$ or close enough.  really no drama at all.  i 'd like to try trading with a little money, and if it doesn't work i'll just sim trade only until i know i can do it.  but that's a great suggestion (sim trading). made too many long positions in a  down market ( don't know why i did that, as i knew i shouldn't be trading long in these conditions. but i exited early (great tip from you people))


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## tech/a (2 July 2015)

grah33 said:


> i've been using puny sized positions so i'm still good, and one of my stocks is going up, so i might end up back to 0$ or close enough.  really no drama at all.  i 'd like to try trading with a little money, and if it doesn't work i'll just sim trade only until i know i can do it.  but that's a great suggestion (sim trading). made too many long positions in a  down market ( don't know why i did that, as i knew i shouldn't be trading long in these conditions. but i exited early (great tip from you people))




No offence meant but from your posts you have a very long way to travel.


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## grah33 (3 July 2015)

tech/a said:


> No offence meant but from your posts you have a very long way to travel.




i hope not.  one would think that if you manage risk properly and make simple trades when the market is uptrending it will be alright. i hope so.


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## tech/a (3 July 2015)

grah33 said:


> i hope not.  one would think that if you manage risk properly and make simple trades when the market is uptrending it will be alright. i hope so.




Yes true.
But a simple question
When is an up trend an up trend?
Your mine and others will be very different.


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## grah33 (3 July 2015)

tech/a said:


> Yes true.
> But a simple question
> When is an up trend an up trend?
> Your mine and others will be very different.




I'll take the challenge.  answer: depends on what time frame we're talking about.  if you can find points and get a new higher bottom and higher high, you got a trend. or even if you got lots of green upcandles in a row with minimal wave shape (like the market upsurge from start of this year), you got an uptrend.  often you can draw a trendline to show the trend of interest. you can also open up the chart and see long distance trends. you could e.g. have a short term down trend but a longer term up trend. the trendlines will show it.   

i have wondered if the market is currently pulling back from the direction of interest should you still enter into a trade . but i think the answer is yes , as the market trend is still up .  (e.g. during the market upsurge at start of the year, it went up for a long while then did a little pullback in Feb. i would have still taken long trades in feb)

and thanks for some really good advice you gave some time ago - about keeping my approach simple, and utilizing the core elements such as volume and trend, the basics, and less indicators.  and maybe a few candlestick patterns. getting there ...:luigi:


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## Triathlete (3 July 2015)

grah33 said:


> i have wondered if the market is currently pulling back from the direction of interest should you still enter into a trade . but* i think the answer is yes* , as the market trend is still up .  (e.g. during the market upsurge at start of the year, it went up for a long while then did a little pullback in Feb. i would have still taken long trades in feb)




I tend to disagree, my example is based on medium to long term trading...

Let us say we where looking at WOW to trade, we look at the long term trend and saw that the stock was in an uptrend from Nov 2011 until May 2014 with a couple of pullbacks along the way. 

So in your thinking even though the stock started to pull back and because you believe it is still in an uptrend you would still take a trade?

However an experienced trader after analysis would have made these assumptions prior to trading the stock.
After some price analysis the strongest levels of the stock at the time where found to be these:

$48.00
$39.00
$31.00
$29.00
$26.00

After also doing some pattern analysis the experienced trader would have also realised that the stock was also on a possible Elliot wave 5 and would have been on the lookout for a reversal and the possible start of the  waves  ABC correction phase which would cause price to retrace 262%.

So once they confirmed this reversal they could have shorted the stock because it was now likely that the stock over time would find support at the next strongest level which was $31 .

Now if the reversal never came at the $39.00 then there would have been good probability that the stock could have continued over time towards the next strongest level of $48.00.

This would have invalidated our first wave count and an alternate wave count would have been needed since the stock continued higher through the $39.00 levels.

As we now know the stock was on a wave 5 and a reversal did take place around this $39.00 level and the ABC retracement started and price did come back all the way to $26.25. 


As I have said this example is based on medium to long term trading which for new traders would be easier then trying to be successful in short term trading until you have the required Knowledge and Skill level.

I will finish off by saying that you should have a very good idea of the likely direction of the stock  but also the price levels that it is likely to reach both on the upside and downside* before you even place a trade *if you wish to be successful. 

Remember 90% of traders fail and 10% succeed.


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## grah33 (3 July 2015)

<<So in your thinking even though the stock started to pull back and because you believe it is still in an uptrend <<you would still take a trade?

gotta  come back to this post but..i meant if the index was pulling back , but still in an uptrend, whether i would or wouldn't take an entry into a share.  was talking about the XAO index doing the pullback, but still in it's short term uptrend. so i would still go long in some share

also, there are different political views out there when it comes to trading. some people reckon the indicator stuff doesn't do it, that's it's more about volume, trends, breakouts, the simpler stuff, and VSA (if u know vsa).


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## fiftyeight (3 July 2015)

This thread makes me think of 



tech/a said:


> There is a vast difference between " learning " Technical Analysis and applying it to turn a consistent profit.




Application, application and application 

What ever technique you use its all about application. Fancy that, one of the most experienced posters is giving great advice


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## Triathlete (3 July 2015)

grah33 said:


> <<So in your thinking even though the stock started to pull back and because you believe it is still in an uptrend <<you would still take a trade?
> 
> gotta  come back to this post but..i meant if the index was pulling back , but still in an uptrend, whether i would or wouldn't take an entry into a share.  was talking about the XAO index doing the pullback, but still in it's short term uptrend. so i would still go long in some share
> 
> also, there are different political views out there when it comes to trading. some people reckon the indicator stuff doesn't do it, that's it's more about volume, trends, breakouts, the simpler stuff, and VSA (if u know vsa).




I agree , there are many different views and also ways to trade and if you can trade successfully that's all that counts. 

You mentioned above that you where talking about the index doing a pullback, but still in its short term uptrend so I would still go long in some share. 

So could you let me know what do you use that will let you know how far the index is going to pullback at that point in time when a pullback occurs?...... will it be 5% or 90% pullback?

This to me is very important because if you are going to take a trade long and the market is showing signs that it could be a large pullback then you could get into a stock at the wrong time which could hit your stops early.


As for me I do not use indicators but do use price , pattern and time analysis which has kept me profitable.

 It includes what you have mentioned above ......volume ,trends, breakouts...have not studied VSA though.


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## grah33 (5 July 2015)

Triathlete said:


> You mentioned above that you where talking about the index doing a pullback, but still in its short term uptrend so I would still go long in some share.
> 
> So could you let me know what do you use that will let you know how far the index is going to pullback at that point in time when a pullback occurs?...... will it be 5% or 90% pullback?




i use trendlines to check out the market direciton, but also what Hull recommends: both a 10 day and 30 day exp moving average.  as Hull suggests, i look for them to be both pointed up (for long trades market must be going up). this is for more short term trading though, rather than medium term trading, so another moving average value is better for longer term trading i imagine. also, the moving averages must be crossed over correctly ( the faster one must have crossed above the slower one, and pointing both up of course).  i guess i would look at it visually too and draw little trend lines (even just 2 point trendlines) - if trend line is up and it's not violated then market is still in uptrend, so i keep going long in my trades.  if the pullback keeps going on and on, well then the trendline will be violated at some point (no longer short term market uptrend), and the moving average lines also won't be pointing up and correctly ordered so i wont trade will I. 
bedford (author ) uses a similar thing too. i think it's a 30 week moving average. and price must be above it. should check the application for this though.
bottom line is that even though there may be a current pullback, the  market can still be trending upward (if it hasn't broken the uptrend trendline your using, it's still in an uptrend)


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## Triathlete (5 July 2015)

grah33 said:


> i use trendlines to check out the market direciton, but also what Hull recommends: both a 10 day and 30 day exp moving average.  as Hull suggests, i look for them to be both pointed up (for long trades market must be going up). this is for more short term trading though, rather than medium term trading, so another moving average value is better for longer term trading i imagine. also, the moving averages must be crossed over correctly ( the faster one must have crossed above the slower one, and pointing both up of course).  i guess i would look at it visually too and draw little trend lines (even just 2 point trendlines) - if trend line is up and it's not violated then market is still in uptrend, so i keep going long in my trades.  if the pullback keeps going on and on, well then the trendline will be violated at some point (no longer short term market uptrend), and the moving average lines also won't be pointing up and correctly ordered so i wont trade will I.
> bedford (author ) uses a similar thing too. i think it's a 30 week moving average. and price must be above it. should check the application for this though.
> bottom line is that even though there may be a current pullback, the  market can still be trending upward (if it hasn't broken the uptrend trendline your using, it's still in an uptrend)





Have you been having success trading using what you have described above?

Have you tried back testing on stocks you are interested in to see if that system actually works or paper trade

I know things can also change with stocks moving forward but would give you a gauge as to what has happened previously using what you have explained.

What timeframes are you actually trading on..intraday, daily, weekly ,monthly or short term (0-3 months), medium term (3-12 months  or long term trading (12month +)?

I ask because usually when starting out trading longer time frames are usually easier to manage in my experience and when you are profitable here you are then able to move to shorter time frames which are harder to navigate due to the emotions of the market and are fast moving.

New traders without knowledge or experience believe trading shorter time frames are easier to trade but fast moving markets are harder to trade and require greater knowledge and skill level.


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## grah33 (5 July 2015)

tria: i just started. but i've stopped as i'm waiting for the market to turn up (i'm also therefore interested in shorting so i can trade more in the future when these conditions come up again).  so not much experience at all. no, i haven't traded medium term.   my current income source is very little, so i need to learn how to trade  shorter term.  everyone has differing needs from the market.  and if one limits their risk and trades within their means, starting with a little, catastrophes can be avoided.  and their is a simulator that i can use if i really don't know what i'm doing.


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## Triathlete (5 July 2015)

grah33 said:


> tria: i just started. but i've stopped as i'm waiting for the market to turn up (i'm also therefore interested in shorting so i can trade more in the future when these conditions come up again).  so not much experience at all. no, i haven't traded medium term.   my current income source is very little, so i need to learn how to trade  shorter term.  everyone has differing needs from the market.  and if one limits their risk and trades within their means, starting with a little, catastrophes can be avoided.  and their is a simulator that i can use if i really don't know what i'm doing.





Ok fair enough grah33...I see but I would at least try out your strategy on a sim account to make sure you are on the right track so you do not lose more money then you need to if the strategy is not working...good luck with it all...


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## grah33 (17 October 2015)

couldn't one just trade US shares when the Australian share market is down trending?  i had a look at the  xao and $SP, often enough when the Aus. market is in a down trend, the US sharemarket is rising (ignore the recent bear market).  or is there something i don't know about.  this seems to  me to be the best solution for someone who needs opportunities all year round. and the bear market that happened recently, that's not often anyway. most of the time one of these 2 sharemarkets is in an uptrend.  have I found a solution?  i don't want to be rich, so plz don't think i'm greedy. 

would love to get a response from people.
thanks


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## Triathlete (18 October 2015)

grah33 said:


> couldn't one just trade US shares when the Australian share market is down trending?  i had a look at the  xao and $SP, often enough when the Aus. market is in a down trend, the US sharemarket is rising (ignore the recent bear market).  or is there something i don't know about.  this seems to  me to be the best solution for *someone who needs opportunities all year round*. and the bear market that happened recently, that's not often anyway. most of the time one of these 2 sharemarkets is in an uptrend.  have I found a solution?  i don't want to be rich, so plz don't think i'm greedy.
> 
> would love to get a response from people.
> thanks




What I believe you need....

*Knowledge *+ *Experience* +* Skill *+* Hardwork *=* SUCCESS*


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## tech/a (18 October 2015)

Of course you can trade cfd's and or instruments short


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## grah33 (27 October 2015)

thanks for the suggestion TechA and others.


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## christianrenel (27 October 2015)

grah33 said:


> thanks for the suggestion TechA and others.




The 2 products which are able to short the market are the following, both listed on the ASX  

BEAR - BETASHARE Australian Equities Bear Fund 
BBOZ- Betashares Australian Equities StrongbearFund, Leveraged around the 200% of from the ASX index.

You will be need to look at the PDS for the more information 

Kind Regards 

Christianrenel


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