Yes good point, I will review all the closed trades to learn from.
Yes, a good place to get started with analysis. Thank you.
Oh yeah, I felt the pain today! The general market fall + the small cap addition fall + that individual stocks are more volatile than an index, all adds up to plenty of fun.
Good to hear that you have allowed sufficient wiggle room, I have been caught out too many times not doing this only to see stocks rising higher without me
And that's a grey area between cutting your losses early and being a hero in a severe downturn, and cutting too early and being stopped out unnecessary in a momentary dip. I don't think there's an "best answer" to how much wiggle room you should leave.I have been caught out too many times not doing this only to see stocks rising higher without me
You're right it has been a long time. I've spent some time of late, mulling over future bear markets and tweaking my plan.
Yes it's easy to forget that market can go in both directions especially when we have had a fairly good run since GFC and globally (e.g. US) markets have been soaring.
Hi Zaxon , using a index filter will at least stop you from getting into more trades when it turns south if you use a system to pick the stocks to enter. Also can signal when to tighten your trailing stop or change the type of stop you would use in those conditions as stated in other threads.
I think that's a good idea. If you're in a bear market, it's no use entering the market on the hopes that some shiny stock will buck the trend. In sideways markets, however, it becomes this grey area of making profits with one stock, then giving it all back with another.
I think an indicator such as a moving average is ideal. A MA, by definition, is a lagging average. So if the index retraces all the way back to below a MA, then you can argue the trend is over.
That's right. You could wait until the market fell below the MA sufficiently to "prove itself" before reacting. For instance, if the market trends below the MA for a week or two and continues downward, you could retrospectively call the MA cross the start of a "real" correction or bear market. Kind of like The Fed gives an initial GDP figure, and then confirms or retrospectively revises it a month later.
That's the official definition. I'd argue it's really no better. What do you call a market that drops by 20% from its peak, and then sideways trends for 3 years. Is it a bear market? Yes. But also it's not going down anymore, so no. I feel it has the same limitations at the moving average cross.
Excellent response to the question too Zaxon. I think moving averages and other indicators are warning signs and could be used to manage individual stock positions. The 20% drop on the index is the last line of defence for deciding drastic action such as portfolio liquidation. I am putting a plan together along these lines to avoid the pain experienced during the GFC. The lessons learnt from GFC should not be forgotten otherwise I will make the same mistakes again next time.
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