The bears got control of the Dalal Street in the last hours of today's trading session, which resulted in the Nifty closing below 18-month low level. Huge selling pressure on market when the Nifty broke the 4800-mark. The 30-share BSE Sensex plunged 297.50points to close at 15,848.83 after hitting an intra-day low of 15,765.53. The 50-share NSE Nifty touched an intra-day low of 4,720, before closing the session at 4,747.80 (lowest closing for the first time since February 5, 2010), down 91.80 points.
So what should do a trader in this market??
Here are some trading strategies for the bearish market-
Simply, if prices are falling and fundamentals indicate a significant downturn, why not sell your assets early, and wait until the next upturn to re-enter the market? Although you may lose some money in the initial sell-off, you are likely to earn it back if you re-invest once assets have bottomed-out.
Exiting any long position at the first sign of trouble
Stop trading with your guessing.
Monitoring your positions closely.
Honoring your stops rigorously.
You also need to consider hedging long positions by using options. If you're using margin for leverage, exiting failing positions quickly is even more important.