Although those who do not have much experience in the markets should have respect for bearish positions (as well as bulls), the truth is that short sales are not a type of investment that is only available to professional investors. Even in less than 5 minutes, you could start trading shortly by only making yourself an online stock file. In this article, we will review the tips to know to earn money in a bear market. They are as follows:
Avoid Greed When You’re Bearish
Take benefits as soon as you have achieved the profit objective you had in mind. Give yourself a margin of error but try not to extend that margin too much because sometimes, we are so clear that the trend will continue, that when we want to agree, we discover that in the stock market investment, there is never anything as clear as it seems.
And above all, it is preferable to cut a loss and re-enter the next day or two days, instead of accumulating several days of losses, which sometimes psychologically obliges the investor not to want to assume that loss and entrust himself to the God of Luck and hope.
We Look For The Weakest
An index, raw material, or sector that will be the most affected by the correction we expect. Within the index, we can see which sector falls the most. Within the sectors that are falling more or more will fall, we look for those companies that have no benefits, and if possible, that have high indebtedness. The great exposure of its business model to a company in a bear market (Bear Market คือ, which is the term in Thai) is also candy for a bearish position. With a little luck, the company does not get ahead, and then we will make a lot of money.
There Is Always A Risk
It doesn’t matter how sure you are that everything is going to collapse. The market may be wrong longer than your pocket can bear and taking into account that we are using leveraged products with expiration date, as we approach the expiration date, the derivative in question will lose value, and we can find it at zero.
That is why to a bearish position, once we are already in profits with a derivative, we must place a stop of losses and never give rise to a profit becoming losses. Sometimes, it is not a matter of rushing the profit.