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

[darkhorse70]

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.

 

[darkhorse70]

I'm just frustrated a bit that as soon as I get a chance to trade, all the signlas are point to sit on the side lines or potentially short.

 

[tech/a]

Like all investments there are times that are better than other times.

Long term long only trading methods struggle.
Those that do churn out some profit are those that are in and out quickly.
Generally in churning markets.
Markets like these now are best to be out of if long---in my view.

If you cant trade short Id seriously look at CFD's if you want to short stock.
You really need to have that capability.

Can be very profitable just ask Sam who pulled $29k last night!

 

[darkhorse70]

Ok thanks tech. I will research CFD's tonight. I believe I can still make money short term trading. I actually did whipe sim trading but the fact that broker fees were $25 per trade really chewed at my profits. Since IB is a margin of that cost I could do it if it came to that.

29k. Now that would be a good day haha

 

[darkhorse70]

Do cfd's work in the exact same way apart from margin. Or is there another element to it like experation etc or different prices compared to the real stock?

 

[tech/a]

Do cfd's work in the exact same way apart from margin. Or is there another element to it like experation etc or different prices compared to the real stock?

No just the spread you need to worry about.

I don't use them but there is a type that you should be using
Someone who does I'm sure will help.

Learn how to position size correctly with margin so you are at no greater risk than without margin.

 

[darkhorse70]

Thanks. Unfortunately Ib doesn't even provide CFD's to Aussie residents. Basically ruled out half the markets potential. I guess I'll sit on the sidelines for a few days for some more clarity.

On the other hand Twitter just bounced off the $46 mark ( good support level) up to 50$. I can maybe make a quick buck above 50. Aim for 52-55$ but im worried it could be very volatile.

 

[VSntchr]

No just the spread you need to worry about.

I don't use them but there is a type that you should be using
Someone who does I'm sure will help.

Learn how to position size correctly with margin so you are at no greater risk than without margin.

"DMA" (direct market acess) cfd's is likely what your referring to.

I second Tech/a's comments on learning to position size correctly. I almost would recommend not looking into CFD's purely because if you haven't traded before the emotional factors could take over and you could end up doing some very silly things that you may not have done if you didnt have access to such leverage.

 

[Weatsop]

The easiest "short" is to exit and don't buy. Not-losing-money is a damn important part of trading. Recognising when to stay the hell out is a damn important part of trading. The markets won't give you a profit just because you want it to. The market doesn't care about you.

The market is not your mum.

Twitter spiked above $50 yesterday, but got hit back down.

• Where will you enter for confirmation? Why there?
• Do you need to see something in the volume or on the book?
• How are you going to exit? A take-profit? If so, why are you setting it where you're setting it?
• What are the fundamentals looking like? What do you know about upcoming news? Is there any?
• How much of a retrace do you expect if it does fly past $50? Why?
• Where would your stops be? How would you know you're wrong about the up-move?

Without knowing squat about Twitter - I don't even trade equities, and I've looked at the chart for about 60 seconds - I would have thought that, having spent September bumping along above $50, with $50 as support, and having recently broken down below $50, AND now having rejected an attempt to get back above... that the likely short term move is down, and that $50 is now fairly strong psychological resistance.

If I was stupid enough to trade something I'd only just seen, going just off the chart, I'd jump in with a short, and a nice tight stop just above $50.

DON'T TAKE THAT AS ADVICE. Even if you could short shares with your account, you'd do better just writing a cheque and sending it to the charity of your choice.

...but why do you think it's going up? What's your plan?

Trading without a plan is a terrible idea.



I ****STRONGLY**** recommend that you take bad trading conditions (or a lack of a plan) as a great opportunity to fire up a paper trading account, download some books on trading to your iphone, and spend a few days (preferably months) practicing and getting to know your plan perfectly.

 

[darkhorse70]

Value snatcher, I know about correct position sizing. Id still only risk 2% regardless of leverage or not. Im currently reading trading in the zone. I'm implementing the idea that I cant have any emotion when regarding trading. I cant become fearful and I cant trade on over confidence.

I'm still trying to accept that trading has a risk. Like the author says once you truly accept that fact, then you have no fears. You have no bias as your emotions don't have any impact on what you are receiving (external data such as charts etc). Even though I have never traded, I believe after 1 year of emotional loss of control, I understand the importance of patience and discipline. The best thing ive learned for a while. Each individual trade has no certainty. But over the bigger picture if you do have an edge then you should come on top in the LONG run. So on that basis im not really excited or fazed if I win or lose a trade (well that's what I believe, I still have to trade lol).

Weatsop, as far as Twitter goes, I have been following it since it made its bottom. If I had money I would have been in since $36. I know it like the back of my hand. Its actually one of the only stocks ive been following for the past few months. The only reason in my mind support at 50$ didn't hold was because the markets are tumbling. And I wouldn't go long on it, now now. But what I wqas trying to say was since Tech suggested short trading, that at 50$ I could put on a 30c stop loss below and aim for $52/55 in the hope that the market would bounce for a day or two. Just because it didn't go past 50$ yesterday doesn't mean it cant. We actually have no idea what it could possibly do. Its all probability. The only reason I would be scared is because the markets might just gap and you get wiped out 5/10% and that's the last thing I want at the beginning of my trading career.

Plus 46$ is a much more important level than 50$. When it gapped up after earnings and previously 46$ was an important spot. Even yesterday it hit 46$ and shot back up to 50$. Most likely short lived but Id be on it in a heart beat if the markets stop their retracement.

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.

 

[Weatsop]

Hey, if you've got a plan, then you're on!

There are always risers, in any market. Some are risers *because* the market is going down. You can trade long in something, every day.

Sorry if the first answer was a bit condescending - I'm more of a warning feller than someone with actual advice. Until I've got a good idea people know what they're doing, I tend to worry about their accounts going down in flames.

 

[Trembling Hand]

Im currently reading trading in the zone. I'm implementing the idea that I cant have any emotion when regarding trading. I cant become fearful and I cant trade on over confidence.

I'm still trying to accept that trading has a risk. Like the author says once you truly accept that fact, then you have no fears. You have no bias as your emotions don't have any impact on what you are receiving (external data such as charts etc).

Hasn't just about 30 years of recent psychology study and science debunked everything in that stupid book?

But what I wqas trying to say was since Tech suggested short trading, that at 50$ I could put on a 30c stop loss below and aim for $52/55 in the hope that the market would bounce for a day or two. Just because it didn't go past 50$ yesterday doesn't mean it cant. We actually have no idea what it could possibly do. Its all probability. The only reason I would be scared is because the markets might just gap and you get wiped out 5/10% and that's the last thing I want at the beginning of my trading career.

Plus 46$ is a much more important level than 50$. When it gapped up after earnings and previously 46$ was an important spot. Even yesterday it hit 46$ and shot back up to 50$. Most likely short lived but Id be on it in a heart beat if the markets stop their retracement.

From what you have here it is clear that you actually have position sizing drastically wrong. A stop and therefore position size has to reflect the likely move not your hope.

 

[qldfrog]

you can be long on BEAR (on the ASX)

 

[Weatsop]

See, I'm being all subtle, "oooh, I'm worried you don't know what you're doing and you'll lose your money, myeh myeh myeh".

...and TH is all: punches dude in face.

 

[tech/a]

See, I'm being all subtle, "oooh, I'm worried you don't know what you're doing and you'll lose your money, myeh myeh myeh".

...and TH is all: punches dude in face.

He's a pussy compared to the market !

 

[burglar]

See, I'm being all subtle, "oooh, I'm worried you don't know what you're doing and you'll lose your money, myeh myeh myeh".

...and TH is all: punches dude in face.

If he is in the ring, he'll be lucky if only his face gets punched.

 

[darkhorse70]

TH, I took the recommendation of the book from Nick Radge. And to be honest it does make sense to me. Maybe you can outline the 'stupid' stuff.

Position sizing - $50 is support level. Id prefer it at $46. Get it at close to that level as possible. Set the stop below that just because the range might push through. Divide amount your risking for example 30c. Divide it by your 2% to get x amount of shares allowed to be bought. Position sizing.


Dont you know. Know one beats the markets.

By the way weatsop I appreciate the advice. Im not attacking you, just responding to your concerns.

 

[Trembling Hand]

Position sizing - $50 is support level. Id prefer it at $46. Get it at close to that level as possible. Set the stop below that just because the range might push through. Divide amount your risking for example 30c. Divide it by your 2% to get x amount of shares allowed to be bought. Position sizing.

My point exactly!

Average overnight gap down is $1.80. How is that coming into your calculations?

30 cents!

And we are in the highest volatility in about 5 years.

Position sizing.

 

[Smurf1976]

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

For example, CBA bottomed at $24.03 early 2009. Let's say that someone bought it at $30 somewhere around that time.

CBA at $30, that's a 7.6% dividend yield (fully franked) at the time, rising to 13.4% yield on that original investment today and with about 150% capital growth since then based on today's closing price. So not a bad investment and no need to pick the exact bottom to make it worthwhile.

That doesn't make you money during the bear, but it's an example of a market decline providing an opportunity to make a profitable "buy and hold" investment. CBA is just one example, there's plenty more like that.

 

[darkhorse70]

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.