Tips To Make Profits In Bull and Bear Markets
Bear markets occur during economic recessions. Bull markets take place when the economy is strong. The demand for stocks rise in bull markets. The advance or decline line represents the number of advancing issues divided by the number of declining issues over a given period. When the line declines for several months as the averages continue to rise then it is a negative correlation. If the line rises for several months and the averages have moved down it is a positive divergence that shows that there is a start of a bull market. Falling prices characterize the bear market while the bear market shows rising prices. The phases of economic cycles are expansion, peak, contraction, and trough. Economic expansion is indicated by bull market starting because bear markets set in before economic contraction begins. Even though the risks are high, you can make profits in the bull and bear market. Markets trade in cycles. There are several strategies for making profits in the bear and bull market.
Purchase the stocks in the bull market when prices are low and wait for prices to rise before you sell them. You need to be optimistic and believe that you are making the right decision because buying and holding is a highly risky strategy if the stocks fall in the price instead of rising as you expected.
You use the increased buy and hold technique that is like the buy and hold strategy. You face additional risk when you use increased buy and hold instead of buying and holding. Investors mostly increase their holdings by buying an additional fixed quantity of shares for every price stock that increases.
The general trend in the price of the security is reversed in the retracement period. The retracement additions provide the investor with a discount on the purchase price.
Full swing trading in the bull and bear markets involves the use of short-selling and other techniques to get maximum gains as shifts occur in the bull or bear market..
Read more about these terms of put options approach of selling in the bear market. You will be charged a premium in the bear market for the put options. You can sell the stock or the put option at a profit in the bear market if the stock prices fall below the put option.
Some investors use the short EFT strategy to make profits. The inverse relationship makes inverse ETFs appropriate for investors who aspire to make a profit in the bear market.
You buy the stocks at a low price and sell them at a higher price.
Here is more to read about these terms in long EFTs.