The following are my trading strategies for the bear market. They work pretty well for me so far. Use it on your own risk if you would like.
1. If Dow Futures is down close to 100 points before the market opens, I wouldn’t buy any stock that day unless a stock is going up with good volume or if Dow turns positive later that day. This rule protects me from entering trades on bad days where Dow is down over 200 points. It is hard to trade against the Dow when most of the stocks go down.
2. If a stock didn’t open higher or isn’t trading above yesterday’s closing price, I wouldn’t buy it. The reason behind it is simple. I believe that if a stock is strong enough, it will continue to go up for a couple of days. If it fails to go up the next day, it means the trend is not strong enough.
3. My stop loss is between 4%-5%, depending on the volatility of the stock. My stop loss point is right below the support of a stock. I like to make quick money so the stocks I pick are volatile.
4. Never trade a stock at market open and during the first half hour unless the volume is really strong for a stock. Often, a stock gaps up at open with little trading volume and then pulls back in the next hour. I don’t want to fall for that. My trading hour begins at 10am.
