Other ways to make money when market is going down?

[grah33]

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.

 

[tech/a]

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.

 

[grah33]

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:

 

[Triathlete]

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.

 

[grah33]

<<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).

 

[fiftyeight]

This thread makes me think of

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

 

[Triathlete]

<<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.

 

[grah33]

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)

 

[Triathlete]

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.

 

[grah33]

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.

 

[Triathlete]

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...

 

[grah33]

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

 

[Triathlete]

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

 

[tech/a]

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

 

[grah33]

thanks for the suggestion TechA and others.

 

[christianrenel]

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