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Trading the bear market with hindsight.


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At the time, the bear market was great - the market was moving in one direction only, and it was difficult to lose money even if you were intra-day trading (which in general is a really stupid idea and massively increases your probability of losing money).  The time to stop shorting looks obvious in retrospect, but again (at the time) the atmosphere was overwhelmingly negative, not just the media but everyday life and the attitudes of other traders.  However, an initial signal was given when price moved back up above the 20 day SMA, which was a warning sign that a bottom was reached.  At this point you think twice about shorting but you don't automatically start going long unless you're really confident and have a wide stop.  The confirmation was several days of the price holding above the 20 day SMA and then the 20 day SMA itself sloping upwards.

My note to self for futur e(although a down move of this magnitude might never occur again): jump in when the price goes into freefall.  If you don't have faith that the down move will hold, get out - but if it keeps falling, HOLD ON and WAIT till you get a WARNING SIGN (price bounces off a low above the 20 day SMA).  At that point STOP TRADING for a few days or weeks until the slope of the 20 day SMA turns around.

By doing so you will get to keep the money you made by jumping on to the downturn, and not lose all of it in POINTLESS, STUPID scalp trading :)

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