 12/23/2020 Red Days in Bull Markets ✔️ Sell or hold? How to trade steady when the market turns ugly. ✔️ Why the media really calls every dip a crash.  Stocks don't move in a straight line.
There are dips and peaks. Everyone who knows anything about the stock market knows that.
But I've noticed that most traders don't truly have a firm grasp of this concept. From the outside looking in they seem to. But once they have money on the line it seems every dip is devastating and every peak brings elation.
Right now we're in a bull market, but that doesn't mean every day will be green. Bull markets are full of peaks and dips.
I want to tell you what you should expect in a bull market and what you can expect to see when the bull market comes to an end.
If you're a trader you need to be conditioned to handle this ride. Sponsored Ad  Slow Steady Grind
Bear markets usually look like an elevator. You can typically spot the sharp drop-offs fairly easily.
Bull markets are also easy to see. Look at a chart of the S&P 500 index for an example. You can see the slow, steady upward grinds.
But they also have a tendency to look like a wavy escalator — dip and peaks along with an upward trend.
Note those dips along the way. Markets have a way of fluctuating quite a bit. There are plenty of red days mixed in, even with a positive trend.
That's an important concept to understand. Not every day will be green even when the market is bullish.
As swing traders, we need to be able to handle the ride. We can't get squeamish and sell on every red day … Just like you shouldn't be getting FOMO and chasing stocks on every green day.
Swing traders need to find risk they are comfortable taking.
In order to do that, you need to be able to tell the difference between a normal red day and a bear market. Dip … or Bear?
If you spend too much time reading the financial media, you might always believe the market's about to crash.
But market crashes are rare.
We've had two big sell-offs in recent memory: one in December 2018 and one in March 2020. But they don't happen often.
Only the crash in March 2020 was considered a bear market. Before that, the last true bear market was in 2008.
But why do so many 'experts' want to keep predicting a market crash? The reason is simple: Fear sells.
A headline that says, 'guru predicts market crash' gets more clicks than 'everything is fine.'
The truth is we spend a lot more time in bull markets than bear markets.
As a swing trader, I like to ride the bull markets up as long as I can. I take profits along the way and always trade with a stop.
Those two components are the key to surviving the market's dips, peaks, and crashes.
The way I can usually tell if we're entering a bear market is when all my stops get hit. When that happens I cut my losses quickly and take a step back. Sponsored Ad Editor Note: Below is an important message from one of our highly valued sponsors. Please read it carefully as they have some special information to share with you.  How to Trade a Bull Market
Regardless of the market, you've got to have a trading plan. For every single trade. It should include your entry, a stop, and a profit target.
Once you've set these prices it's your job as a trader to follow your plan.
When the market is bullish the hot stocks tend to keep coming. Self-sufficient traders should keep taking the trades as they come.
If you've got an edge, your profit target will get hit more often than your stop.
But that's not to say some stops won't get hit. Stocks can fall in a bull market and rise in bear markets.
You can be wrong on any one trade. And the market can crash at any time. It doesn't wait for a reporter or expert to tell it when to crash.
That's why you must always trade with a stop in place. Trading a Red Day
Next time a position slips into the red for the day, don't panic. Slow down and ask yourself two simple questions.
If your answers are no, you've got just one thing to do: Follow your plan. Stick to the rules you made ahead of time.
If your stop hasn't been hit, keep the position. If it has, it's time to cash out. Sponsored Ad "Meet My 6th Millionaire Student" Bears and Dips
Swing traders aren't trying to catch a quick move. Swing traders are trying to capture big swings that play out over time.
Big moves have peaks and dips along the way. So plan to ride the waves. Give the stock room to breathe.
When the market turns red, follow your plan. When the market's green, follow your plan. Trade smart and trade with a plan.
No one trade should make or break you. One trade will never make you rich, but one trade can bankrupt you if you don't cut your losses.
Plan your trades. Take the losses with the profits and, no matter what, stick to the plan.
Stay the course,
Paul Scolardi Editor, Swing Trade Millionaires
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