10 Tips for Trading a Downtrend

10 Tips for Trading a Downtrend

Buy the deepest dips into oversold territory.  Indexes tend to snap back to the previous days low, the 5 day ema, 200 day sma, and the 30 RSI.

  1. Sell the rallies back into resistance. The short term resistance can be the high of the day, a rally back to green, and eventually the 200 day SMA.
  2. Trade small; half  your regular size or less.
  3. Trade shorter time frames. Profits go as quickly as they come; take them while you have them.
  4. Stop trying to hold stocks, and buy strength and start to sell momentum short.
  5. Start trading inverse ETFs.
  6. Go to cash in your retirement accounts until the 200 day is recovered.
  7. Buy put options as much as you buy calls.
  8. Don’t be an investor, be a trader.
  9. Don’t marry any stock during market corrections.
  10. Day trading is where the quick trends will be.
  11. Long Term trend following on the short side is a way to avoid the quick intra-day trends, price noise, and stress.