Before we dive in, let’s start by breaking down the definition of a stock market crash is so we are all on the same page:

Technical Definition of a Stock Market Crash

A stock market crash is a sudden dramatic drop of stock prices across a major market mechanic, indicie, or industry. It results in major, widespread losses, and usually is driven by panic selling and underlying economic or political factors. Oftentimes, crashes occur after a time of large-scale speculation and economical bubbles in one or multiple industries. 

The South Sea Bubble (1720)

One of the earliest recorded stock market crashes occurred in the early 18th century in Great Britain. The South Sea Company, which was granted a monopoly on trade with South America, saw its stock price rise dramatically in the early 1720s. Speculators rushed to buy shares in the company, driving the price even higher. However, the company had few actual assets and was essentially a Ponzi scheme. When the bubble finally burst in 1720, the stock price collapsed and many investors were left with significant losses. The crash was a significant event in British history and is often cited as an early example of financial speculation gone awry.

The Wall Street Crash of 1929

Perhaps the most famous stock market crash in history is the Wall Street Crash of 1929, also known as the Great Crash or the Stock Market Crash of 1929. The crash, which occurred on October 29, 1929, is often seen as the beginning of the Great Depression.

The crash was caused by a number of factors, including overproduction, low wages, and an oversupply of goods. As a result, consumer demand began to decline and businesses began to struggle. In addition, the stock market was fueled by speculation, with many people buying shares on margin (using borrowed money). This added to the instability of the market.

On the day of the crash, the Dow Jones Industrial Average (DJIA) fell by more than 11% and continued to decline in the weeks and months that followed. The crash led to widespread panic and a significant loss of wealth for many investors. The effects of the crash were felt around the world and contributed to the global economic downturn of the 1930s.

The Black Monday Crash of 1987

The Black Monday Crash of 1987 occurred on October 19, 1987, when the DJIA fell by more than 22%. The crash was caused by a number of factors, including a slowing economy, rising interest rates, and trade tensions between the United States and other countries.

The crash was exacerbated by the use of computerized trading systems, which allowed for rapid selling of stocks. Many investors panicked and sold their stocks, leading to a further decline in the market. The crash had a significant impact on the global economy and led to a recession in many countries.

The Dot-Com Bubble (2000)

The Dot-Com Bubble, also known as the Tech Bubble or the Internet Bubble, was a period of rapid growth in the stock prices of internet-based companies in the late 1990s and early 2000s. The bubble was fueled by speculation and hype surrounding the potential of the internet and the belief that internet companies were immune to traditional business cycles.

However, many of these companies had little in the way of actual assets or revenues and were overvalued. When the bubble finally burst in 2000, the stock prices of many internet companies collapsed, leading to significant losses for investors. The Dot-Com Bubble is often cited as an example of the dangers of speculation and the importance of proper due diligence when investing.

The Global Financial Crisis (2008)

The Global Financial Crisis, also known as the Great Recession, was a significant economic downturn that began in 2007 and continued into the early 2010s. The crisis was caused by a number of factors, including the collapse of the housing market, and risky financial practices.

2020 COV-19 Crash

In March of 2020, we saw a roughly 40% decline in the S&P in just a month after worldwide lockdowns due to fear of COVID spread. Markets tumbled pricing in the potential of indefinite lockdown of economies across the world.

What’s Coming in 2023?

When you zoom out and really look at the market as a whole in 2023, we will likely see a continuation of the main themes from 2022: High-Interest Rates, Rising Unemployment, Falling Housing Prices, and Uncertainty. All of this describes what could be coming in 2023. We have already seen drastically high inflation numbers and rising rates trying to combat that inflation, which has resulted in a slowing of the economy and market instability. Now, there is no way to truly predict 100% what will happen in 2023, but by looking at the current conditions, one can reasonably believe that these negativities won’t turn around in the early part of 2023. 

Will we see some easing on rate hikes by the FED towards the middle to end of the year? Maybe, or maybe not. But just looking at how things are from a high-level at the moment, one can reasonably believe that 2023 may continue to be a shaky year. As traders, we focus on REACTING to events, not predicting.     

How to Prepare For The Coming Market

The most important thing you can do to make sure you are trading and investing safe in times of uncertainty and downturns is to focus on obtaining quality education, and getting involved in an experienced, transparent community. It may sound cliche, but proper education will be the number one thing separating you from dominating this type of market in 2023, or getting dominated by it. 

You have to learn from others who have been through major market downturns and from those who have not just traded through bull markets. At Bulls on Wall Street, we have tons of professional traders, including Kunal of course, who have seen every market condition possible, traded through them successfully, and can teach you how to navigate them. If you don’t learn how to successfully trade these types of markets from someone else who is actually experienced, you can miss out on huge opportunities, or even worse, take some massive financial hits. Invest in education, and surround yourself with a supportive, knowledgeable, credible, and active community this year to reinforce your education and learn more in real-time.

Early-Bird Pricing Ends SOON For Our Next Live Trading Boot Camp

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The post Complete History of Stock Market Crashes: Is One Coming in 2023? appeared first on Bulls on Wall Street.

Some of the biggest fortunes in the world have come from stock market crashes. In my latest video lesson, I talk about how to trade in downtrending macro market conditions, and my favorite strategies and tips to use to capitalize:

Have a Plan During a Stock Market Crash

Stock market crashes aren’t anything new. You were around in 2008, and probably during the early 2000’s during the dot-com bubble. Ever since the stock market was founded in the 20th century, the market has crashed every 5-10 years. 

Regardless of whether you are 10-year trading veteran, a complete newbie, or just someone with 401k, you need to have a plan for what you will do during a market crash. It should be pre-determined, otherwise, when the crash happens, you will panic and sell the bottom just like everyone else who loses a ton of money during a crash. 

Understand the Big Picture Trend of the Stock Market

The advice I would give to the average Joe with money in the market is to just do nothing! Sure you could hedge, but for most people that gets too complicated, and they end up messing it up because they time it incorrectly. 

If you are a momentum trader like myself, and are looking for some more higher-risk, high-reward strategies, I would look into various instruments to short-sell the market, which is essentially capitalizing on the stock market going down (learn the strategies I use in bear markets here) .

Take a look at the monthly chart of the Dow Jones industrial average:

What is the trend? Clearly up. What happens every time there is dip? It gets bought up. So what does that mean you should when the stock market dips? NOT SELL. This is, of course, is easier said than done.

At the moment when you are watching your portfolio get crushed, the primitive part of your brain is panicking, and you convince yourself that everything is going to 0. Don’t let fear dictate your decision making during a crash!

• Stay Calm, Don’t Make Impulse Decisions With Your Money
• Don’t Watch Every Tick: Watching the Markets 24/7 Will Just Make You More Emotional
• Don’t Think Like The Crowd
• Hedge Your Long Term Positions
• Don’t Catch A Failing Knife, Let the Bottom Pick Itself

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When you have the right rules and training, days during a market pullback and high volatility can be some of your biggest winning days. Instead of panicking like 90% of investors, you can use these 5 rules to put yourself ahead of the curb:

1. Let the Bottom Pick Itself

Picking tops and bottoms is a fool’s game. Jesse Livermore said it best: “The first ⅛ and the last ⅛ are the most expensive”. Even with support and resistance and other indicators, strong trends will usually last longer than everyone anticipated. 

Trying to pick the bottom can lead to death by 1000 cuts. Even if you taking small losses, you can still, end up having big red days by taking a bunch of small losses, and get eaten alive by commissions. Instead, wait for confirmation that the bottom is in, and join the uptrend. Wait for series of higher highs and higher lows, and a remount of the major moving averages. 

2. Oversold Can Become More Oversold

“But it’s RSI was 15!” Indicators often will go out the window. Remember: “Markets can stay irrational longer than you can stay solvent.” We are seeing that in the oil sector currently, and longs are getting crushed trying to catch a falling knife. There is no rule that a market has to reverse when it starts going down. Don’t try to be the hero and pick the bottom. 

3. Use Margin With Caution During Crashes

My rule of thumb for margin: “Use it to add to winners, NEVER for losers.” Margin can be your best friend, our your worst enemy. In times of high volatility, it needs to be used carefully. 

All stocks are trading outside of their average range. This means when you get stubborn, you can take even bigger losses. And when you use margin on losing trades, these losses can become even bigger, and lead to potential account blow-ups.  

4. Don’t Chase Strength

New traders often confuse rallies with “the bottom is in”. Markets don’t move straight up or straight down. Some of the biggest days in the market actually occur during market pullbacks and bear markets. But it doesn’t mean the bottom is in. These are often just dead cat bounces or short covering. The market rallying temporarily is NOT a buy signal. You need to have a series of higher highs and higher lows, not just one move to the upside.

5. Use Wider Stops

During major market pullbacks like we are seeing now, all stocks and ETF’s are trading above their normal trading range, especially high beta names. Facebook’s ATR (average true range) is 4.83. On days like yesterday, it will move 8-10 points. Whether you are taking a short trade or counter-trend scalp, you need to use wider stops so you don’t get taken out of a winning trade prematurely. 

This means on the trades you take, you have to use wider stops to account for the larger range. Using a 1 point stop trading it during uptrending market conditions might work. But that would be way too tight on days like today. You will get stopped out prematurely, and miss the move your anticipating. Use wider stops one day of high volatility (but be sure to obey them!).’

Free Chat Day 8/19: Watch Me Day Trade Live

Next Monday, August 19th, we are doing a free chat day with our day trading chatroom. During the free chat day, you get to watch me day trade live on screen share. Watch all the day trading setups, see all the trades I take in real-time, and see all the scans, charting layouts, and other gimmicks of my trading style!

Click Here to Sign Up For Our Free Chat Day

The post 5 Essential Rules for Trading Market Pullbacks appeared first on Bulls on Wall Street.

Whenever the market is choppy or bearish, I get a million questions about how I’m surviving.

“How much have you lost?”
“Have you blown up?”
“Did you get killed in the market today?”

The truth is, I thrive during market volatility! Today in particular, I made $5500 trading names such as $vblt $fit $nflx $tsla $ziop etc…

See, that’s what non-traders and struggling traders don’t understand: just because the market isn’t doing well, doesn’t mean you can’t make a ton of money. One of the great things about momentum day trading is you don’t have to ride the Dow into the ground like the big Wall Street funds; a good day trader is agile, taking advantage of whatever the current market environment is to make money. Make your money on what’s hot until it’s not – then move onto the next thing. It works equally well – sometimes even better – in a crashing market. Why? Because there is a ton of volatility, which day traders thrive on!

Now I know a lot of you are looking at all the red on your screen and doubting your future in the trading business. I used to be in the same position, stressing over what the talking heads on CNBC were saying and wondering how much money I’d lose when the $SPY took its next nosedive. But over time I developed a system to not just deal with market volatility, but to OWN it. While I like to post free content, like this video I just did on trading exhaustion gaps,

I really dig into my system in the 60 Day Trading Bootcamp. In the Bootcamp, I go over every single aspect of my trading system in live webinar sessions, then make sure you remember it all and learn how to actually apply it with homework, quizzes and a simulator. You’ll leave my classroom with the skills and confidence to tackle huge down days with a smile on your face and dollar signs in your eyes.

Of course, nothing beats learning live, right? If you’ve seen any of my photos, you know I play as hard as I work.

So you’ll be excited to know that you have TWO opportunities to see me in Las Vegas in the next two weeks!

The first event will be September 25th – 27th. Traders4ACause is a charity founded by Nate Michaud, AKA InvestorsLive, to raise money for several great causes. Once a year, Nate brings together a panel of awesome hosts (including yours truly!) to share their trading knowledge. You can learn more, and register, HERE.

After that, I’ll be speaking at the Trader and Investor summit, which runs from October 3rd – 5th. I’m thrilled to be included in this three day, info-packed event! I’ll be speaking alongside some great traders and educators, including host and founder Timothy Sykes. To learn more, or register, visit the Trading and Investor Summit page. 

Feel free to email me kunal@bullsonwallstreet.com if you have any questions. See you soon!

The post How I am Thriving During the 2015 Stock Market Crash appeared first on Bulls on Wall Street.