Bull Market Trading Strategies

By Author: alexander
Total Articles: 10
Comment this article

Best strategies for bull market 2020

A market is termed bullish when it expects a continuous rise higher over a long duration of time. The concept of the bull market primarily comes into the picture while discussing the shares or stocks, but one can also relate it with forex, futures, commodities, bonds markets. It happens when a set of assets exceeds the customary laws of demand and supply. This type of demand kicks the price of the stock to a higher level.

The concept of a bull market might appear threatening, but it is very easy to harvest most of this trend if you properly strategize your plan. Here are some of the famous and efficient bull market strategies for you. Read them and try to adopt them; they will surely help you in the long run in the trading market.

1) Adhere to a quality equity portfolio

When the bull market starts, the trader gets all types of companies, including the good, ugly and bad, which rally with the financial market. Over time the bull market matures, and the trader finds that the markets are becoming more particular about rewarding only specific ...
... firms with larger valuations. The main motive of the investor in the bull market should be gradually shifting towards quality. The movement towards safety should be progressive with the surge in market valuations.

2) Follow your financial plan

It is an essential factor in the bull market. The financial plan guides you on how much you should allocate to debt, liquid assets, gold and equities. Adhere to the financial plan, and the time you feel that you or your allocation is going out of track, take a pause and again turn back to your original plan. The pan ensures that you book the gains automatically at a higher valuation and also have liquidity when other cheaper alternatives are available.

3) Keep churning the profits

Many traders doubt whether booking profits and churning is compatible with a long-term approach while investing. The answer is that it is. The primary rule of the financial stock market says that if any trade is too fair to be true, then it is likely, not true. A trader must follow this primary rule when the financial markets are following a bullish path. Keep harvesting gains at regular periods, although one can also re-enter the same asset or share at higher levels.

4) Follow a phased method for investing

The old but efficient SIP method works well in a bull market because, in the bull market, it is better to purchase an approximate value and hold it till eternity. It is very easy to say this but hard to implement. When it comes to realty investing in this approximate value traders may either wait for a too extended duration or enter a stock and regret it soon. Hence, it is always better to follow the phased method for investing. This method could even be applied in the bull market.

5) Follow the same phased approach to selling also

As discussed above the phased approach works well while investing. Similarly, it also works excellently while selling the stocks. When the trader exits a specific stock, the higher the amount he gets, the better the stock proves out to be for him. In a bull market if one follows a phased method to the current stocks, then he will most probably end up with a far better price. It simply means that one may not end up landing on the top price, but surely he will get the better price out of it. Apart from this, the other benefit of this method is, it eliminates fear about exit time for a trade.

6) Remain on the side of financial market momentum

It is an essential point which small traders should keep in mind in a bull market. The bull market is regarded as a non-unidirectional market. But the bull market is intact as long its momentum is high. Hence one should always remain on the same side of market momentum. So you can make use of dips to purchase, or you can purchase on high and wait for the share to reach higher. In both cases, one should never make an attempt to outguess the market. Remember that in a bull market, the fact of selling stock against the momentum can put you in big trouble and losses.

7) Make use of options for hedging the financial risk.
Derivatives are regarded as the weapons of mass destruction by the famous Warren Buffett. Options and futures can assist you to control the financial risk in the bull market. When a trader is trading in bull markets, he never knows the exact time or interval at which the market is going to sharply correct. The thing one can do is to secure the downside risk by buying the put options.

You may find options a little bit complicated in the beginning, but once you start working out on its basics, you will soon become familiar with these. Options are the cheapest tool which can protect you against losses. You are just providing your small part of gains to ensure your portfolio.

The Bottom Line

These were some of the strategies which a trader can employ while trading in the bull market. If you are finding the best broker for starting your trading career, then you can go with Oinvest.

It is an authentic financial service provider regulated by the Financial Sector Conduct Authority. The minimum deposit accepted by the broker to open a trade is $250 with zero commission fee on trading. Visit the site of the broker for opening a trading account and for checking out its exciting features.