The number one thing you need to do in a bear market is NOT LOSE YOUR MONEY.
That’s right, if you do that you’re not going to be very happy when things turn around and you miss out on the next rally to the moon.
In a bear market, you have to play smarter. HODL doesn’t work. In a bear market, you’ve got to be a trader.
On the bright side, by honing your skills here — you will be ready. If you can make money while things are trending down, you will make 10x more when things turn around.
This is your chance to perfect your skills and earn now, then earn more later. To help you get there, here are some essential tips to keep your trading account ready and full for when things turn around.
UPDATE: before you continue reading, here’s something you should know. We built a tool to let traders place stop losses and take profits at the same time! If that’s your thing, check it out!
Tip 1: Stop losses (SL)
What kind of bear market survival guide would this be if I didn’t mention stop losses?
As you may already know, stop losses are sell orders you place around specific support levels. The idea here is that if the price hits this point, it’s likely to go lower because it has breached the support.
They are also the primary way you mitigate your risk in a trade. If your stop loss is set at 9% below entry, that means that if things go south and prices start dropping, you’re limited to a 9% loss on your capital. Not great, but a hell of a lot better than getting stuck holding the bag as prices continue to drop.
In a bull market, you could probably have just held and eventually the price would have come back. Not here though. In a bear market, if you don’t set stop losses you’re capital will be stuck in the market. At that point, you’re no longer a trader because there is nothing you can do.
An awesome technique you can use for stop losses is to set a trailing stop. This way if the price goes up, your stop loss follows along. If for some reason you miss your target, it will at least execute close to your entry. Often locking in profits and eliminating all risk in your trade.
Tip 2: Take profits (TP)
Also known as targets, take profits are the good kind of exiting a trade.
Targets exist to help us keep a level head. It’s tempting when prices are going up to keep saying “I’ll sell as soon as it hits X. As soon as it hits Y! AS SOON AS IT HITS Z!!!”. Eventually the price will stop raising, you will miss your exit, and greed will have gotten the best of you.
The trick here is to place your targets on the lower side of important resistance points. This way you are able to successfully exit the market, taking your profits with you and moving on to the next trade.
Another key thing is to set multiple targets. This allows you to mitigate your risks while still winning big. When a coin starts mooning, you want to be hitting your targets — locking in higher and higher returns.
Similar to stop losses, you can also use bots to set trailing take profits. This allows you to hold off selling as the price raises and only pulling the trigger when things turn around.
Tip 3: Set your SL and TP at the right places
The above tips are kind of useless if you set your stop loss and targets at the wrong prices.
This is where technical analysis (TA) and all that exciting stuff comes into play. Reading charts, checking the volume, using algorithms, and much more.
At the end of the day, it really comes down to just spotting the trend. As a trader, you always want to be going WITH the trend. In a bear market, that trend is down and to the right. So unless you’re shorting, it’s up to you to notice instances where a coin is bullish. Jumping in at the moments when it starts mooning and cashing out before it resumes the main trend.
This can happen at any time, for any coin. Some good news or changes in market sentiment kick a coin into gear and cause some price action. A skilled analyst can spot these changes instantly and know something has changed.
Then it’s simply a matter of applying patterns that have worked well in the past and calculating where to exit.
The key thing to keep in mind here is that TA is not a crystal ball. We can’t predict the future and the market can always behave unpredictably. Rather, strong TA helps you make the best possible predictions with the information you have.
We are traders, not gamblers, and technical analysis is what makes the difference.
Tip 4: Have a community
Crypto trading is a battlefield. And you wouldn’t enter a warzone alone, so why would you trade by yourself?
When it comes to winning in this space, you do NOT want to be outgunned. Every time you press buy, someone else is pressing sell. Every time you sell, another guy is buying. Either you’re making a bad call — or he is.
The guy on the other side of the trade has a team of analysts, bots, and the latest news streaming in, you had better bring your top game. Or be lucky — and real traders don’t rely on luck.
The way to level the playing field here is to have a strong community. This means having a mentor who knows what they’re doing. Having peers that you can count on. And even, counter-intuitively, having people that are less experienced than you too. You’d be surprised how often you catch a mistake you’re making by giving advice to someone else.
A good community will cut through the noise to deliver only the essentials that you need to know. They will have deep domain expertise in technical analysis and will be bold enough to make predictions (never trust someone who wants to “teach”, but isn’t putting their money where their mouth is).
Bonus Tip: Set your SL and TP at the same time
Knowing when you want to sell is great, but if your alert goes off at 4am and you don’t wake up to change your order — it can be futile.
Most exchanges will either let you set a take profit or a stop loss, but not at the same time. Fortunately, there are tools available that provide this functionality. A new but solid option on this front is Signal. Setting alerts with blockfolio can work short term, by anyone looking to get serious about trading should consider getting the right tools for the job.
If you do these things, you can improve your skills while also minimizing your losses and locking in gains.
- Limit your risk by using stop losses.
- Control your greed by using take profits.
- Make smart entries and exits by using technical analysis.
- And increase your odds by having a community.
I hope you enjoyed this article. If you know someone that is brave enough to be trading in this market, send it their way. If you would like more confidence in your SL and TP points, join our free Telegram channel. We have been earning double digit returns, even in this tough bear market.
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