How Should You Trade in a Bear Market?

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  • Trading in a bear market is only suitable for the minority of crypto users
  • Bear market trading can be brutal, but if you want to do it now is the time to practise
  • This guide will give you some tips to help you protect your capital

Bear markets aren’t for the faint hearted. Only those with the requisite trading skills should even attempt it, but, of course, you won’t get there if you don’t experience it. Given that we’re in the middle of a bear market for crypto right now, here’s a few tips that budding traders should bear in mind as they try to make their way through the viper’s pit that is a crypto bear market trading environment.

Use Stop-loss Orders

Stop-loss orders can help protect your investments from potential losses. By setting a stop-loss order, which will automate a sell should the price drop below a certain point, you can limit the amount of money you are willing to lose on a particular stock.

Learn How to Short Sell

Short selling involves selling crypto that you do not own, with the expectation that the price will decline. This can be a profitable strategy in a bear market, but it also carries a higher level of risk because if the price goes higher than you expect you may get liquidated.

Don’t Go All In

Bear markets are about retaining capital, and profiting should come second. For this reason it’s important not to go all in, in case the price does something unexpected. Give yourself a figure of trading capital that you never go over (e.g. 25%) and only trade with that.

Monitor the Market Closely

It is important to stay informed and monitor the market closely in a bear market. This will help you make better-informed decisions and avoid potential pitfalls, while alerts can help you keep on top of the market without having to be at your desk the whole time.

Unsure? Don’t Try It

Overall, the only adequate training for trading in a bear market is first hand experience. Just start off small and then add more capital once you have found what works for you.

Bear in mind though that trading during a bear market is only for the minority of crypto users – the vast majority should simply stay out until the market shows signs of a turnaround or just hodl.