Now you know what it takes to make money in the stock market.
Bull and Bear markets are relative terms. To have any positive value they must specifically apply to YOUR situation, and more specifically, to YOUR time frame. The US stock market is made up of a huge number of smaller markets. All of the different sectors, industries, or any other groupings represent potential Bull or Bear markets. Even an individual stock can represent a unique Bull or Bear market - all by itself. The only market that matters is the one that directly affects you. Bull and Bear markets are simply price trends - up and down. This is important because trend reveals continuous price movement in the direction you wish to trade. Locate Bull or Bear markets in your chosen time frame. This allows you to take positions WITH the trend instead of against it.
The "right conditions" exist when odds are good that prices are about to move in the desired direction and that the move will be long enough to give you sufficient profits. We call this a "Setup." The "right time" occurs when price begins to move in the direction you expected - AFTER the right conditions are met. This is the Trigger. "Always know when to get out before you get in." Even though Exits usually don't get the same attention as Entries, they are far more important. To "Exit At The Right Time," you need an Exit Strategy that minimizes any initial losses, maximizes your profits, and minimizes the amount of profit you give back. Although there are many ways to accomplish these goals, Exit Strategies that use Initial Stops and Trailing Stops based on average price movement, volatility, moving averages, or other support & resistance levels tend to work very well.
Track and measure your results - specifically your Win/Loss Ratio, Profit/Loss Ratio, and Cost Per Trade. Many traders mistakenly think they need a huge advantage. The good news is that your edge can even be relatively small - so long as it produces a consistent Win/Loss Ratio, AND your Profit/Loss Ratio is positive enough to produce sufficient profits after transaction costs. You can do very well in the market with a reliable edge and a steady stream of trades.
There are two factors that should always be included in a complete Risk Control plan. First, an Exit Strategy that uses "stops" to eliminate "unplanned" losses, and second, a Position Sizing routine that prevents unavoidable losing streaks from causing serious damage.
Here's how you can do it!
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