Investors and traders both profit greatly from bear markets; the difficulty is that they simply aren’t aware of it at the time. You have to understand that the market has an ebb and flow nature. Just like most things in life.
In a bull market, anyone may make money, but in a bear market, the real traders can be distinguished from the amateurs. These are the times when knowledge, discipline, and profits are carved for those who can willingly handle them, and in today’s article, I will discuss with you how to be a real trader by showing how to make money in a bear market.
Any market your trade doesn’t need to move up for you to profit, it simply needs to move. You may make money on almost any form of market as long as you can correctly detect the trend. With that said, let’s take a look at what a bear market looks like or means.
What is a bear market (Crypto crash)
In the stock market, a drop of more than 20% is often judged as the mark of a bear run. But that definition doesn’t apply to Cryptocurrency as it’s so volatile, that prices can rise or fall by 20% in a matter of days. The best way to describe a bear market in cryptocurrencies is as a protracted period of consistent price drops.
A bull market is the total opposite of a bear market. A period of rising prices and high confidence. How to Recognize Bull and Bear Markets Since markets go through cycles, most investors will encounter both bull and bear markets.
Trying to spot reversals is the key to making money in both market types, bull or bear (when the markets are topping out or crypto crash market). Those are ideal places for investors to enter (or exit) positions Moves to make in a bear market
- The best way to describe a bear market in cryptocurrencies is as a protracted period of consistent price drops. A bull market is the total opposite of a bear market (crypto crash). A period of rising prices and high confidence. How to Recognize Bull and Bear Markets (crypto crash market) Since markets go through cycles, most investors will experience both bull and bear markets. Trying to spot reversals is the key to making money in both market types (when the markets are topping out or bottoming). But selling at a loss will lock in your losses.
- Consider buying the dip “Buy the dip,” is a rallying cry on social media every time prices drop. And, coming back to the earlier-mentioned logic of purchasing low and selling high, it can be a smart decision. Warren Buffett is quoted with saying:
Buy when there’s blood in the streets, even if the blood is your own
But not everyone should choose this. For starters, prices may fall even further. This is why some investors purchase dips in smaller amounts; they may invest $50 today and an another $50 next week, if prices decline even further. It is a type of dollar-cost averaging that helps mitigate the effects of protracted price falls.
The biggest risk is that individuals become enthused about the notion that cryptocurrency is “for sale.” As a result, they might spend money that they had not intended to put into cryptocurrency or money they need for other financial goals.
Additionally, they might purchase cryptocurrencies without performing the usual due diligence, which could be negative long run. If you don’t have the cash to spare, already have high exposure to crypto in your portfolio, or don’t have time to research which cryptos to buy, don’t try and buy just because prices are low. There will be other lows – and maybe next time you’ll be in a better position to take advantage of them.
- Always be bullish in the long term. Concentrating on your long-term goals will help you keep this most recent downturn in perspective. We’ve seen dips like these before, and we’ll probably see them again because cryptocurrency is volatile.
However, if you invest with a five to ten year time horizon, it’s far simpler to retain during difficult times. Also, remind yourself why you got into crypto in the first place and the technology behind it. This detail helps keep you in check.
Here are some ways to seek profit in crypto crash
Short Positions A short position also called short selling or shorting, is when you borrow cryptocurrency and sell them in anticipation of the crypto price falling more in the future. If the crypto price drops, you buy those coins at the lower price to cover the short position and make a profit on the difference.
Swing trading takes advantage of the short-term price movements in a coin’s chart rather than looking at the large macro trend. There will always be little peaks and dips in the price while it progresses in the general direction of a verified upward or downward channel.
Thus, experienced traders can profit from microtrends by purchasing at lows and selling at highs during a bear market. In this scenario, market volatility during crashes is the ideal situation as it provides the most useful local optima in the chart.
For swing trading you need to learn about the several types of technical analysis and indicators, such as Relative Strength Index (RSI), if you want to swing trade. This is only advised for those who have a high tolerance for risk and have extensive experience analysing short-term moves using technical analysis.
Scalping Regardless of which way the charts are moving, scalping will allow you to profit off those incremental movements on just about any chart. It only requires a small amount of perseverance to work hard for a few hours in front of a computer while taking advantage of frequent buy and sell opportunities during times of high volatility.
A bit too monotonous for you? Try using trading bots to automate this process once you get some experience under your belt. Like any other trading strategy, scalping is not without its inherent risks. All it takes is one major dip to erase all your hard work for the day.
So just remember, don’t get greedy. In conclusion If you can hold on to your investments during a bear market, they can regain their previous value (and potentially gain more) as the bear market always reverses and prices climb back up.