Trading in a bear market

In the lessons on “How to Trade Chart Paterns” I have a problem with the items where there is a downward trend expected. According to the lesson you should place a entry below the neckline with a target further down on the Double Top, Head and Shoulders and Rising Wedge. Entry here would result in a loss as I see it as the price will be dropping from the entry level. The others are perfectly clear as you will be making an entry should the price escalade upwards from there. I must be missing something somewhere. As this is vital if anyone can help me with an explanation please.

Thanks!

Gerrie Venter

Hey Gerrie, don’t worry I had a but of difficulty understanding this when I started out as well.

If you’re looking at EUR/USD and you think it’s going to go down, then you will put in a SELL order with your broker. Your broker will then sell euros in exchange for dollars to the amount you specified in your order. If you were right, and price does indeed go down, then you will instruct your broker to close this position. The broker will then buy back the euros it sold previously and pay you the difference, thus making a profit.

When you put a BUY order on, your broker will do the same just the other way around, but I think you understand that bit.

Did that help?

Thanks a ton for your help. It is still a bit murky, but I am on the road to recovery!

Well this is not really going to be of much help to you but it’s apt nevertheless.

I sat and watched in awe as the Dow started dropping from just above 14 000 taking ‘the lot’ with it in 2007. And there’s an old saying on Wall Street that goes something along the lines of “In a bear market you run out of money long before you run out of ideas”!!! LOL!!!

Geez. It feels like just yesterday to me. Can you believe that??? 2007!!!

Regards,

Dale.

Thanks for your thoughts. Those were bad times. It seems impossible to keep economies on an even keel (or nearby) as there are too many factors that influence those.
Gerrie Venter