Day trading is fast and provides many opportunities every day. And to obtain maximum advantage of these opportunities, you can learn day trading online.
What is the bear market?
A bear market is a period when assets such as stocks or commodities decline by 20% or more from the highest point. Another term used for this is a correction but there is a slight difference between both; correction happens when there is decline of more than 10% in the price of an asset.
Causes of a bear market:
There are many reasons for stocks falling in a bear market, but here are a few most popular reasons:
After the release of disappointing results and weak upper-level guidance, stocks tend to fall into a bear market. Another reason could be an acquisition considered a bad company move by the investors. When stock is overbought, its prices can decline, and another strong reason could be the Central Bank's decision to increase the interest rates.
Investors often don't realize the bear market is set in until their losses don't go above a specific level. Losses, rising uncertainty about the future market trends and increased market volatility can make an investor indecisive, and during this time, investors make the worst decision to restrict the losses. And in this busy world, nobody gets time to appear for physical classes to learn from the experts, but no worries, you can learn day trading online.
Trading Strategies for Bear Market
1)Pair Trading
It is the art of buying and selling simultaneously. It is one of the most popular commodity trading strategies. Through this, we can protect or hedge every trade we make daily. This Trading is generally held for a shorter period. Therefore, it has the potential to make a profit through simple and low-risk positions. Fundamental and Technical data is taken into consideration before doing pair trading. Pair trading assumes the market to be neutral; therefore, there is no impact of the overall market's direction on its win or loss. This Trading enables you to profit from any market condition: uptrend, downtrend or sideways.
2)Diversification in multi-sector
It is the process of buying assets in various sectors. The logic behind this is that all the sectors together cannot be in a downtrend, so if one industry is making losses, you can cover those losses by making a profit in another sector. It is one of the most important strategies to beat the bear market. However, you should research thoroughly before you make any decision regarding the long or short of stocks or commodities. Multi-sector diversification is the key to boosting income returns. It aims to reduce losses by investing in sectors that react differently to the same marketing conditions. Only unsystematic risk can be reduced through diversification, as systematic risk is unavoidable. You might have heard that higher the risk,higher the return, but in diversification, there is a low risk, so returns are also comparatively low.
3)Quantitative Trading
It is also known as Algorithmic Trading. It aims to identify profit opportunities through research on historical data. The Quant traders evaluate different stocks and commodities through mathematical and quantitative methods. It is profitable only if you apply correct risk management techniques.
4)Day trading
There are three types of Trading- day trading, swing trading and long-term trading. Day trading is trading for less than 24 hours. In a highly volatile market or bearish market, day trading is highly recommended because it gives you protection against high market moves. In addition, you might have heard that news directly affects the financial market, which will help you trade on the information.
5)Use technical analysis
For intraday traders, technical analysis is very beneficial. There are hundreds of technical indicators that give you buying and selling indications. If you know the correct time to enter and exit the market, you can earn good returns with low risk.
Conclusion
This article shows how you can convert the worst situation into a great opportunity just by applying the knowledge of commodity trading strategies. But to have knowledge, learning is the key. So you can learn day trading online at Commodities University.
Source URL: https://www.commoditiesuniversity.com/
