When new investors witness the powerful bullish market, they would be feared of alteration. Let’s discuss some of the trading strategies used in bullish market. Always remember , the end of “Bull market” is the start of the “Bear market” !.
At first, you will find a various best, worst and average firms gathering in the market. One of the fundamental principle for trading in bullish market is to be able to identify the companies with good quality.
It is always better to diversify investment in different sectors such as Gold, Real estate, Mutual funds, Fixed deposit etc. Booking profits should be a regular exercise in a so called bull market. This is known only by the experienced traders. You should have a plan on how much to be allocated to debt, gold, liquid assets, etc. With a plan like this, whenever the allocation goes out of the limit, you can keep it back on line.
A gradual method of earning profit is a necessity while maintaining bullish path. You should keep earning profit at regular intervals. This is a consistent approach for long-term investment.
It is better to purchase bulk-sum and detain it for a long time. Realistically, while investing in bulk-sum, investors are never certain about the exact range to enter the stock. Therefore, the better worked approach in bullish market is SIP.
If you take on a gradual approach in leaving a stock, then it is much likely to give an effective price. Even if you may not be at the top, with every successful exit, you can make big profits.
Another important approach in bullish market is that you should have a prepared mentality to leave the stock at a certain price. Even if its a risky level or an assuring level, you must have trading discipline.
Bullish market is not Uni-directional. As long as the market is flawless, the momentum is always up. You can identify the market’s suggestion through its momentum. Therefore, you should be able to keep up with the flow of momentum.
You will never be aware of the next condition of the market until it happens. The most you can do is to safeguard your risk by buying put options. Options are the cost-effective way to guard losses.
Be sure to focus on long-term investment even in bullish market.