Track Trades In Scary Bear Market

2020-03-17 | Simpler Trading Team

When a bear market is on the prowl it can be a fast-moving and exciting time to trade.

And it can be scary as heck.

Traders should consider turning to proven strategies to manage risk and identify potential trades. During downturns, Elliott wave analysis often draws a crowd as a viable trading strategy, especially in the futures market.

Elliott wave analysis uses a model of the market which allows traders to map out multiple paths that markets might take. This analysis gives clues to identify which scenario is more likely, how far markets might travel, and where a given scenario is wrong.

Moderators at Simpler Trading have followed Elliott waves since the start of the year when a decades-long move above the lows of 2009 appeared stretched. Indications were a decline was coming.

Elliot waves also signaled that if the downturn exceeded an established percentage the bulls would suffer under a striking return to a bear market.

The bears are now trying to find a bottom after serious losses in the market, despite a rally today behind government intervention in the markets.

The Elliott wave map of expected market movement also provided opportunities to day trade to the downside with good setups.

This type of trading can be scary for traders without a plan. Rallies within strongly-trending bear markets can be swift and brutal. While there is profit potential, sudden rallies can wipe out profits and even wipe out accounts with incredible speed.

Wading into the excitement of a fast-moving bear market presents potential profits, and traders should focus on the best setups. Manage risk, and wait if the potential is beyond your trading plan.

Be constantly vigilant, and tap into Elliott waves to help map trades.

We Saw: another spike against the bearish trend — 

  • Wild markets not letting up
  • Government intervention to calm fears
  • Traders scrambling to understand market shifts

We’re Watching: … our cash positions into the morning —

  • Did we mention staying flat and nothing overnight?
  • The size of the proposed economic stimulus
  • Will any stimulus be enough to stabilize markets?

Want to know how to trade the Fed’s intervention (and what not to do)? Follow our urgent market update HERE.