Bear market volatility...stay disciplined.
Have you ever been so convinced that you are right about the market at yet it goes against you? Most have and in fact, most make the same mistake. The mistake is to keep in a trade based on conviction and not what the chart is telling you. Right now this is a very important thing to keep in mind. Bear markets are renowned for volatility and second-guessing. In my last post, we went over a probable outcome for the market moving forward however things seemed to be going against that outlook. What went wrong? The simple answer is nothing. No one can be certain of how things will play out. The only thing we can do is make a plan based on what we know and trade. Currently, there are a lot of people that are convinced that everything is going to go back to normal in a matter of weeks. The chat boards are full of people saying, "ATH by May" etc. etc. are they right? Let's look at an example CCL. Carnival had plenty of debt coming into this downturn and with no business activity, they are losing money faster than my highspeed internet 😂. To try and survive they have sold billions of stock and are taking on even more debt. So, if this all goes well from here can Carnival be in the same position in a few months as before, not a chance. This is just an example but this is the kind of thing that will continue over the coming months and much worse.
Looking at the chart today we can see that not much has really changed. We are still in a bear market bounce and have no reason to think that it is more than that at this time. Because the market is so volatile I find it best to just focus on the trading day, not the big picture and follow what the chart is telling you not what you think the market should do. For example, I often trade using the SMA keeping my long and short positions in place based on whether or not I see two closing candles above or below that average. By doing so I don't get caught up trying to make trades because I think the market is going to tank any minute or vice versa. How you like to trade if you focus on the chart and stay away from the news that should have made the market go down or up and you will make much better decisions.
Looking at the chart today we can see that not much has really changed. We are still in a bear market bounce and have no reason to think that it is more than that at this time. Because the market is so volatile I find it best to just focus on the trading day, not the big picture and follow what the chart is telling you not what you think the market should do. For example, I often trade using the SMA keeping my long and short positions in place based on whether or not I see two closing candles above or below that average. By doing so I don't get caught up trying to make trades because I think the market is going to tank any minute or vice versa. How you like to trade if you focus on the chart and stay away from the news that should have made the market go down or up and you will make much better decisions.
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