If you are a versatile and adaptable trader, you can make life-changing money from these conditions.

If you do any of the 3 mistakes we discuss below, you will get CRUSHED.

Read this carefully so it doesn’t happen to you

Veteran trader Kunal Desai will break down 3 mistakes you should avoid at all costs in the current market conditions:

Mistake #1: Counter-Trend Trading

So many new traders get burnt trying to trade counter-trend setups aggressively. A counter-trend setup is just a setup that is against the overall macro trend of the stock. The way to best identify the macro trend of a stock (meaning if it is in an uptrend or a downtrend) is by zooming out and looking at higher time frames, like the daily chart. 

If the daily chart is in a major downtrend, and below major moving averages, you don’t really want to be trying to long that stock to the upside. You should be trying to take the easy trade and look to ride the trend by shorting the stock to the downside. Just because a stock looks cheap and you have FOMO thinking this might be the bottom and you may miss a bounce opportunity, doesn’t mean it is a good buy. Trade alongside the trend of the stock, and watch your win percentage and confidence fly. 

Bear markets can last for a very long time. So trying to catch a falling knife every day can really damage your account. If you are looking to long a stock that is in a downtrend, or short a stock that is in an uptrend, wait for a clear trend reversal on a higher time frame and then take your entry. You will want to wait for things like high lows (if you are looking to long a stock) or lower highs (if you are looking to short a stock), and the reclaim of the major key moving averages you are watching on the higher time frames. 

Counter trend trading is one of the biggest detriments to new traders because it can be extremely hard if you are inexperienced to time trend changes perfectly. Don’t fight the trend!

Mistake #2: Oversizing

Just like we talked about earlier, new traders always come into the game read to make a ton of money… FAST. With that mentality, they end up going way too hard on their sizing trying to hit all of their financial goals at once, and ultimately blow up or lose a significant amount of money as a result. This can happen even faster in a bear market where volatility is even higher than normal. 

You have to start small. Oversizing from the start while you are inexperienced, and not worrying about proper risk-to-reward ratios and parameters will put you in some really ugly positions. Don’t try to become a pro in one day. You have to EARN the right to trade a lot of size and put enough risk on to make $1000-$2000 per trade. 

Drop your ego, start small, and scale up as you show consistency. 

Miskate #3: Not Knowing The Market Conditions

Right now, in these market conditions, you CANNOT buy breakouts. If you are unaware that we are in a bearish market, and you are trying to buy breakouts all day long or are looking for long opportunities, you will get burned all day long.

A lot of new traders just look at individual stocks or the hot stocks for the day, and disregard the overall market. In doing so, they really don’t know what direction the market is in, where the money is flowing, and how that overall direction and bearish or bullish sentiment in the market can affect the individual stock they are trading.

You have to analyze $SPY, $QQQ, $IWM, and other major indices every day to see what type of market we are in. If the major indices are all gapping down aggressively for the day, you may want to think again about buying breakout opportunities.

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The post 3 Deadly Bear Market Mistakes to Avoid Now appeared first on Bulls on Wall Street.

Markets change, and if you don’t change with them, you WILL lose all your money.

This year we are seeing lower highs, failed breakouts, and many breakdowns in major indices. To help prepare you for the worst of this bear market, which has yet to come, we want to talk about 3 simple approaches you can take to capitalize during this market.

Here are 3 strategies you need to be using in a bear market to survive and profit as a trader:

Short Sell

Not many new traders know that you can make money when stocks go down. This is called short selling (also referred to as shorting) , when you borrow shares of a stock from your broker and then buy them back later, ideally at a lower price. Short selling can be very profitable in market environments like the ones we are currently in.

Here is a simple graphic explaining how it works:

However, you have to manage your risk even more aggressively when short selling. A long position you can only lose what is in your account balance. But with short selling you can lose more than what’s in your account because stocks can go up more than 100%, meaning you would go in debt to your broker. You HAVE to understand timing an risk management to short-sell profitably.

This video will show you more about short-selling, and you can manage risk so you can execute these trades correctly:

Long Oversold Bounces

Most traders don’t know that the biggest rallies to the upside happen in bear markets, not bull markets.

Bear markets bring a lot of volatility into the markets. This means that stocks will be trading well outside of their normal ranges, which is great for day traders. If you are not familiar with or confident short selling stocks, there is still plenty of money to be made to the long side in a bear market. Stocks that have big pullbacks will always bounce at some point.

Stocks don’t just go straight down forever in a bear market. Just like stocks pull back when they are in an uptrend, stocks will spike when they are in a downtrend. When stocks get overextended to the downside, they will often have nice bounces. This strategy works especially well when a stock has had several consecutive down days. Keep in mind that this type of trading setup is not something to marry. You are just going for the quick counter-trend move, and then quickly taking your profits. Once the stock bounces, it could start to fade off again and you may end up breakeven or with a losing trade.

Here is a video explaining how to improve the timing on your trades so you can time these trades correctly:

Stay In Cash

Knowing when not to trade is essential for achieving success as a trader in the long run. In bear markets, stocks will not just go straight down every month. They will sometimes consolidate sideways, and not have an obvious trend. They will start to trade in a tight range, and there will not be much money to be made because there is no volatility or range to profit off of. During these times it is crucial that you stay on the sidelines until one of your go-to setups presents itself. Patience is crucial during these periods.

When you look back at your trades at the end of every week and add up your PNL for the week, you will see how much overtrading can hurt you. Even if they are small losses, boredom trades are a complete waste of your physical and mental capital. In order to be a successful trader, you need to have the discipline to only trade when your edge is there. In a bear market, you cannot be expecting the market to dump huge every day. You need to wait for an obvious trend and volatility to come back into the market before making trades.

Our Live Trading Boot Camp focuses specifically on teaching traders how to dominate bear markets. The best traders make the biggest fortunes during a bear market. The goal of this course is to show you how to grow your account in ALL market conditions, bull and bear:

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The post 3 Simple Approaches to Trading A Bear Market appeared first on Bulls on Wall Street.

This downturn has prompted some questions from our community surrounding the topics of how do I stay safe during a bear market or a market crash?

Yes, during a crash you can make a TON of money by taking advantage of the day-to-day volatility as well as getting yourself into some very nice long-term positions. But, you can also lose money even faster if you are not properly prepared.

That is why today we wanted to break down some of the top things you should NOT do whatsoever during a market crash:

Master Your Emotions

It is impossible to remove emotions from trading or investing. That is the reality of the game we play. But, in times of panic and downturn in the market, people’s emotions get heightened tenfold. When the market is crashing, you have to remain diligent and in control.

With a lot of red in the markets, especially if you are positioned heavily to the long side, you have to resist the instinct to panic, especially if you have long-term investment horizons or goals. Consider historical market statistics. Volatility is a natural part of the game, and crashes can happen. If you’re in the market for the long haul, bear markets are unavoidable. You have to accept periods of losses on your account and in the overall market. Downturns are temporary. Over every 15-year period, starting on any single day in its history, returns for the S&P 500 have been positive. Money moves in and out of the market, but economic growth ultimately spurs the value of companies higher year over year.

We will dive into more strategies on how to master emotions in this week’s live webinar:

Don’t Panic Sell 

Just because the market is crashing or is down, you don’t want to panic sell at random levels. Yes, if a stock breaks a key level or support or hits your stop during a crash, sell by all means. But, if you are just selling out of pure fear and anxiety at a random point, that is not the right decision. Most of the time, you’ll be selling into support or the ‘bottom’, which brings upon pure frustration and painful losses. 

Selling your positions in the middle of a crash can be the worst thing you can do. It’s the exact opposite of the buy-low and sell-high moto. Be calculated with your entries AND your exits always, especially during volatile times in the market. These reasons are why 95%+ of traders lose money in the markets. This video lesson dives into more detail how to be the 5% that thrive in these market conditions: 

Don’t Randomly Average Down or Buy Stocks

Yes, following a market crash can bring some of the best long opportunities you can see in decades, but, you have to time them right. Market crashes can bring devastating moves to the downside, so you have to be careful of where you are buying stocks and what your plan is for each position. 

Make sure that you look to buy at key levels of support where strong demand is coming in at. Look for large zones at key whole dollar levels with multiple bottoms on longer term time frames. Those will be levels that have the highest probability of attracting buyers at, giving you the best chance of entering a successful long position at. 

Focus Even More On Your Risk-Reward

Always make sure to follow the risk-reward chart below, regardless if you are day trading, swing trading, or position trading stock within a bear market or a market crash. Be careful and pick your spots right when entering positions during times of volatility.

Focus on a 1:2 or BETTER risk-reward ratio on all trades and positions. It doesn’t matter if it is a scalp or a swing trade. When the volatility is through the roof in the market, you have to skew the odds in your favor even more than when the market is more ‘stable’. If your target isn’t 2x what you’re risking, walk away from that potential trade. There will be plenty of opportunities in this market environment, always avoid forcing set ups with poor risk vs reward:

Hard Stop Losses

The last thing we have to mention is hard stop losses. We’ve heard too many horror stories of new traders getting annihilated because they didn’t use a stop loss. Don’t believe gurus on the internet that tell you market makers will move a stock to take out your stops. No market maker cares about your tiny $10,000 position in Netflix. Mental stop losses can go south quick if you’re not an experienced or disciplined trader. Put on a hard stop loss right after you enter a position.

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The post What NOT to Do in a Market Crash appeared first on Bulls on Wall Street.

Most traders today have never seen a bear market before, and have no idea how to capitalize. Today we will give you our best strategies and tips for day trading market volatility, and talk about how you can build up your account in 2019:

Inverse ETF’s

My favorite way to capitalize on weakness in the overall market is to long inverse ETF’s. Inverse ETF’s are very simple: They appreciate in value when the overall market depreciates. Our favorite instrument to trade is TVIX. On some days when the market is rolling over, it can go up 10%-20% in a day.

Note that leveraged ETF’s should just be used to capitalize on short term momentum in the market. They also have major pullbacks since they are leveraged, and can fall just as fast as they rise. I never hold positions in them overnight, as they tend to decay overtime, and they have huge gaps in both directions.   

Keep Size SMALL

Many new traders are under the impression that increasing position size will automatically make you more money. In volatile markets, trading large position sizes will actually make you less money. You will become more emotional and as a result make poor trading decisions. You will see some wild swings in your PNL, and you will focus on the money instead of the market’s trend.

You don’t need trade that much size to make good money when you have this kind of volatility. When trading something like TVIX that can move 5 points a day, you only need to be taking 100 shares of it to get $200-$300 days, especially if you are scaling your positions.

Scaling In and Out of Positions

My favorite trick to capitalize in volatile market conditions is to scale in and out of my positions. This means that I will buy and sell ¼, ⅓, or ½ my positions, instead of buying and selling the whole thing each time. This useful in volatile market conditions when there a large swings in each direction.

I find that scaling helps newer traders stay less emotional and keep losses small. There is nothing worse than getting a big move in your favor, not taking profits, and then having it completely come back to your entry price and turn into a loss. Taking ½ or ⅓ of your profits allows you to get some cash flow, while also keeping yourself in a position to capitalize on a bigger move.

You can also scale in with your entries. This allows you to keep your losses small if you are not on the right side of the trend. If you only take ½ of your planned position size at first, if it turns out you were wrong you are taking a very small loss. Next time when you get on the right side of the trade, you can add the second ½ of your position and have a much bigger winner. This will keep the risk vs reward ratio strong, and make having a high win percentage less important.

Don’t Blindly Short

Most traders reading this have not traded in a bear market before. Most are under the impression that the market just goes down everyday, and you just need to short at any price and you will make money. Bear markets are actually periods when the market sees some of the largest rallies.

If you look back at 2008, you can see the S&P had multiple periods were the market rallied 10%-20% in just a few days. Just last week we saw a 7% rally in just one trading day. If you short at the wrong time, you will get squeezed badly, especially if you are trading leveraged ETFs. You need to learn how to wait for a market pullback. 

Pullbacks

Buying breakouts and shorting breakdowns is the last thing you want to be doing in volatile market conditions. More volatility means all instruments are trading with larger than average ranges. If you are chasing strength and weakness you will get smoked out. If the breakout or breakdown doesn’t follow through, the market will likely have a huge reversal and you are going to be underwater.

Instead, wait for pullbacks to the intraday moving averages and the VWAP. You want entries that give you a sold risk vs reward ratio, ideally at least 2:1. Given the range of everything in the current market conditions, you can get some very high reward plays, sometimes 4:1 or 5:1,if you are patient for the right entry on a pullback.

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The post Essential Tips for Day Trading The 2019 Market Volatility appeared first on Bulls on Wall Street.

Today we are going to give you some of the best short selling setups we use on almost a daily basis when the market gets weak. Here are the 4 short selling strategies we use, and videos about how you can trade them. There’s also real trade examples that show you directly how to apply them.

Earnings Breakdowns

In a bear market there will be a lot of negative reaction to earnings. Even when earnings reports are good, a stock will still often fade off in a bear market. Earnings breakdowns are one of my favorite setups, since they have such a strong negative catalyst behind it. Here’s how you trade earnings breakdowns:

The 2nd Day Continuation Short

In a bear market, downside momentum will often continue for consecutive days. The day after a big move to the downside in a stock will sometimes see great follow through as the trend continues. Here’s how you trade 2nd day continuation plays:

The End of Day Fade

Sometimes stocks will take a while to make their move to the downside. They will consolidate all day, and then at around 2-3PM start to break support and fade hard. This is a great late day setup to use in a bear market. Stocks tend show strong weakness towards the end of day as traders get margin calls during this time of day and get forced out of their positions. Here’s how you trade the EOD fade:

VWAP Fade

Stocks will often pop and retrace after a strong move to the downside. Often downtrending stocks intraday will pullback to their VWAP (volume-weighted price average), and then continue their downtrend after testing the VWAP. Shorting a pullback towards VWAP is a great strategy when stocks are in a downtrend:

Bonus Setup: Trading Inverse ETFs

If you are not comfortable shorting, there is actually ways to make money to the longside while the overall market is going down. You can do this through buying inverse ETFs, like TVIX, UVXY, and VXX. Here’s a video going into more depth on this topic, and using a trade example with TVIX:

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The post 4 Short Selling Strategies To Use In A Bear Market appeared first on Bulls on Wall Street.

Today we’re going to talk about the scariest phase of them all: The run-down phase. Also known as a bear market. We haven’t seen a bear market for around a decade. But there is likely one coming over the next couple years. Now is the time to study and prepare. The best traders actually make the most money during this period. You will see them in all financial markets so it pays to understand what they are, why they occur, and how you can trade them.

The Run-Down Phase

The run-down phase is a period of complete fear in the markets. Sellers are firmly in control. Once the supply of shares exceeds the demand in the distribution phase, the rundown phase. It is characterized by a series of lower highs and lower lows, and high volume sell offs. The news cycle is very negative, as longs become trapped, and there are bag holders everywhere. Novice traders blow up as they try to catch a falling knife and average down.

Bear markets occur every 6-10 years in the stock market. They do not mean the end of the world is coming like the media portrays it. Everyone who doesn’t understand investing is scared. Logic does not rule this period, and everything goes much lower than everyone imagines. Often climatic selling and the bulls giving up total hope coincide with the end of the run-down.

If we start to see higher lows for an extended period of time the market may be entering the accumulation phase. If the market starts to see higher highs and higher lows, there may be a full on reversal into the run-up phase. Here is how you should trade during this phase so you don’t lose money like everyone else.

How To Trade This Phase

This phase is a short-sellers dream. Gap ups in the market are sold into hard. Gap downs always follow through with more selling. Even good news and earnings reports cannot get stocks out of their downtrend in a bear market. Everything will fall further than you expect. The last thing you want to try to do if you’re an inexperienced trader is to try to a catch the falling knife.

A bear market is actually great for momentum traders as a ton of volatility enters the market. Even in a bear market there is still opportunity for good long trades if you know the right setups. There is a lot of opportunity to both the short and long side. You can short breakdowns and strong rallies. You can also play oversold bounces as well if your timing is good. Understand that all long trades in the run-down phase have to be quick (we’ll give you the exact setups we use in the webinar).

Remember bear markets don’t last forever. Do not do what everyone does during a bear market and panic sell. The whole point of understanding market cycles is so you understand that every phase doesn’t last forever. If you do what everyone else does let your emotions take control, you will lose a lot of money.  

This is a SPY chart from 2008 and early 2009, the last bear market we had. It was a short bear market compared to past ones, but it still resulted in around a 50% pullback in just 8 months. You can see how much volatility came into the markets once the $128 support level broke. Also notice how much volume came in as the market more or less went into free fall mode for a period in October 2008. Once we bottomed, we transitioned straight from the run-down to the run-up phase. 

If you missed yesterdays article talking about the distribution phase click here to read it.

Free Live Trading Webinar TONIGHT and Tomorrow 

We will be going into much more detail about the run-down phase in tonights webinar. With the current state of the market, this could be the most important webinar you attend.

Sign up for the webinar here. 

The post The Run-Down Phase: Mastering Market Cycles Day 4 appeared first on Bulls on Wall Street.

We are witnessing a major trend change in all the major stock market indices in 2018. Last Friday, the Nasdaq actually went red on the year after the latest 2% intraday correction. Market corrections are inevitable, so you have to be prepared to adjust your strategy to these new market conditions. Volatile markets are when many people go bankrupt, but also when many traders make fortunes. In order to profit from volatility in the stock market you need to have sound trading rules that will make you money consistently and protect your account.

1. Don’t Fight Trends

We have seen some incredible intraday trends to both the long and short side the past couple months. If you are on the right side of the trend, you can get some great risk versus reward ratios on your trades if you know how to let your winners run. If you are caught on the wrong side of a trend, this is the worst time to be stubborn.

Stocks will consistently dump further than you think possible, and also have massive bounces that can squeeze you to the short side. If you don’t obey your stop loss, it is very easy to lose a huge portion of your account in a matter of hours. Remember that in trading it takes months and years to achieve success, but everything can be undone in a matter of hours if you are undisciplined.

2. Scale Out Into Strength/Weakness

No one really knows how far stocks will dump or bounce. In order to profit from volatility, you have to make quick decisions and cut losses quickly. In especially volatile market conditions like we are in right now, selling or covering a fraction of your position as it goes in your favor can be extremely useful. Stocks are trading well outside their average ranges, and for this reason you will want to leave some of your shares for the bigger move. 

3. Sell Half Your Position And Move Stop To Breakeven

Once the stock is at a key resistance or support, you can sell or cover half of your shares. You can also move your stop to your buy price, and that way you are guaranteed to have a green trade no matter what, while still putting yourself in a position to capture a bigger move. In volatile markets like this, stocks can quickly reverse on you and can turn a green trade into a red one in a blink of an eye. Moving your stop to your entry will prevent you from wiping out your realized gains from the trade.

4. When In Doubt Stay On the Sidelines

If volatile markets are not where you thrive, stay on the sidelines. Cash is a position as well. If you are unfamiliar with market conditions like these and have no setups you can trust, don’t try to figure it out by risking your hard earned capital. One of the most important traits of successful traders is their ability to know when to stay on the sidelines when they know they have no edge in the markets. If you are having issues staying on the sidelines and losing money from boredom trades, check out this article to learn how to stop this destructive behavior. 

5. Pay Close Attention To Sector ETFs

Always keep a close eye on the SPY and other sector ETF’s when you are trading an individual stock. Many of the tech stocks for example follow the trend of the QQQ closely. If you are short NVDA for example and the QQQ is starting to bounce, it is not a bad idea to take some profits in your NVDA trade.

6. Trade Only When There’s An Obvious Trend

Many traders make the mistake of trading stocks that are not trending. They then proceed to get chopped up from entering and exiting so much and flipping their position. The SPY will not dump 3% every day. Nothing goes straight up or straight down forever, so you have to understand when it is realistic to expect a stock to begin a strong trend, and where it is likely to end. If you have any doubt if there is a strong trend that you can participate in, it is likely not a high-quality trade. Therefore it is likely going to be a choppy trade without clean momentum, which will waste your mental and physical capital which you could be using for better quality opportunities.

7. Stop Blindly Buying Dips

It looks like there is a serious trend change in the overall market. For the past 9 or so years, we have been in a non-stop bull market. Every major correction (such as Brexit for example) was bought up quickly. But it seems like BTFD is not working anymore. For the first time in years, we are seeing clean continuation to the downside in the overall market. It is a big sign that we are seeing a major trend change, with an even bigger correction possibly looming. Trades to the long side will not be clean until the overall market starts to stabilize.

8. Use Margin Wisely

Margin can be either your best friend or your worst enemy. Using margin in volatile markets can destroy your trading account in a matter of hours if your trade risk is not proportionate to your account size. Use margin when you are adding to an already green position, versus adding to a losing position.

Free Live Training Session 

Come join us on April 16th for a special webclass: “Secrets to Staying Green When the Market Goes Red“. On this free live training, I will show exactly the setups I use to profit from volatility in bear markets.

Click here to sign up for the free webclass.

The post How To Profit From Volatiliy In The 2018 Stock Market appeared first on Bulls on Wall Street.