How to Avoid Losing Money in a Bear Market

by | Dec 7, 2021 | Market Lessons

What’s up, everyone? Bryce here.

Lately, I’ve discovered a really useful strategy for NOT losing money: not trading!

The market for momentum stocks remains EXTREMELY weak. Take this as an opportunity to be extra selective with your setups.

Here are a few specific ways to take advantage of this slow market (and most importantly, not lose money!)

Trade Like You’re Retired

Tim Sykes always talks about how he likes to trade like he’s ‘retired.’ When the market’s bearish, this is a great rule to follow.

Everyone sees it — the stock market is in a short-term downtrend. It’s hard to ignore when the S&P 500 is down as much as 5% in a little over a week.

This kind of volatility can tempt some newbies to trade the market dip. But you shouldn’t feel a need to trade just because the market’s volatile. 

A volatile market doesn’t turn a bad setup into a good one — but it can fool newbies this way.

When the indexes started dipping on November 22, social media traders everywhere started talking about buying SPY puts and VIX calls…

It’s pretty obvious they’re over their heads in this bear market. Some of them clearly don’t even understand how the VIX is calculated…

Bottom line: Be patient … don’t let FOMO get the best of you. 

Trade like you’re retired until the setup you’ve been waiting for shows up on your monitor, then strike immediately.

Wait to Trade Until The Afternoon

Let’s be honest, the market’s not that fun right now…

It’s been hard to jump in on anything in the morning because there just haven’t been that many opportunities. 

I don’t trust the games that go on first thing in the morning. I’d much rather wait for the morning exuberance to wear off before entering any trades whatsoever.

Recently, the best setups have come later in the afternoon (as charts have time to develop throughout the day).

Sometimes it takes time for good setups to develop. Those hot morning patterns may not show up when momentum is cooling.

Don’t be afraid to sit on your hands. After all, it’s a beautiful time of year to do some chart-watching!

Go On Vacation!

December isn’t necessarily a bad month for stocks. But it is less active as some traders put a pretty little bow on their year.

The less activity, the fewer the opportunities…

This doesn’t make December a bad time to trade. There’s value in not having to sit around and stare at setups all day.

With things settling down, Matt and I may or may not be planning on a little vacation fun to end 2021…

Why not? It’s better than staring at bad setups all day.

There will always be opportunities in the market. It’s never a bad idea to give yourself a break and reset a bit. And this market is making it quite easy to do so.

But if you don’t want to spend your hard-earned money on a trip, do some studying! That’ll prepare you for January when things should pick back up.

Catch ya next time,

Bryce Tuohey

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