← Optimal Finance Daily - Financial Independence and Money Advice![3452: [Part 2] My Top 13 Rules for Profitable Trading in Any Market by Bob Byrne with James Altucher — Optimal Finance Daily - Financial Independence and Money Advice cover](https://megaphone.imgix.net/podcasts/d5cf4cc8-fc42-11f0-b226-8f24230d20f0/image/e3f4a7dad8bd72c05e7b3972679eb598.jpg?ixlib=rails-4.3.1&max-w=3000&max-h=3000&fit=crop&auto=format,compress)
Optimal Finance Daily - Financial Independence and Money Advice
3452: [Part 2] My Top 13 Rules for Profitable Trading in Any Market by Bob Byrne with James Altucher
00:12:27
Bob Byrne outlines six essential strategies for surviving and profiting during bear markets
Loading summary
Transcript13 lines
- [00:00]
A
Starting a business means juggling a lot and not just what customers see. There's operating agreements, compliance filings and legal paperwork that all make up your business identity. That's a lot to manage on your own. Start your business with Northwest Registered Agent. They help you get more for your business, more privacy, more guidance and more resources. Northwest has been helping small business owners launch and grow their businesses for nearly 30 years. They're the largest registered agent and LLC service in the US with over 1500 corporate guides, real people who know your local laws and can help you every step of the way. With Northwest, privacy is automatic, they never sell your data and they give you free tools like operating agreements, meeting minutes and thousands of how to guides. Don't wait. Protect your privacy, build your brand and get your complete business identity in just 10 clicks and 10 minutes. Visit northwestregisteredagent.com ofdfree and start building something amazing. Get more with Northwest registered agent@northwestregisteredagent.com OFDFREE.
- [01:12]
B
This is Optimal Finance Daily My Top 13 Rules for Profitable Trading in Any Market Part 2 by Bob Bryan with Jamesaltucher.com Six Rules for Bear Market Investing now, as I mentioned before, the first seven rules are mainly useful in a bull market, but when you're in a bear market, those rules might not apply. You have to be nimble and adapt to what the current market climate is. That's why I've put together a handful of rules that I've used for over 20 years to consistently profit during bear phases. Of course, not everyone likes to invest during a bear market actively, but the reality is that some of the fastest and strongest rallies occur during the context of a bear market. Unfortunately, the rules we utilize for investing in bull markets don't apply correctly to bear markets. You see, in bull markets, when volatility is low and price movement is more predictable, we want to trade in the direction of the bull trend and adopt a long term investment time horizon. But because bear markets are often more volatile and unpredictable, investors need to reduce their investment time frame and focus on taking faster profits. To help you navigate and trade profitably when stocks are in a downtrend, here are my six rules for bear markets. Bear Market Rule Number one the trend is still your friend. Yes, I stole this one from Big Lou. It's just as important to follow the trend in a bear market as it is during a bull market. So this rule is useful in any market. Now, I've always felt that bad things tend to happen under the 200 day moving average and in bear Markets. This is especially true, you see, once a stock or an index breaks beneath its 200 day moving average, the stock market is giving you a valuable piece of information. The market is telling you that something under the surface is very wrong. And if you're an investor that likes to buy stocks, a break under the 200 day moving average is your warning sign that it's time to hunker down and prepare to play by a new set of rules. Remember, just as stocks Trend above a 200 day moving average in a bull market, they can also Trend beneath a 200 day moving average in a bear market. Bear Market Rule 2 Avoid stocks closing beneath a 5 day exponential moving average. Bear markets are associated with massive stock market losses. But here's something you might not know. Bear markets are also responsible for generating exciting short term rallies. The trick however, is knowing when it's safe to begin buying stocks now. When stocks come under attack and sellers overwhelm buyers. The most important technical indicator in myquiver is also the most basic. An exponential moving average. The only difference between an exponential moving average and a simple moving average or sma, is that the former places more weight to the most recent price, which serves to reflect new market data better. Here's how to avoid losing vast amounts of money during a bear market when volatility is exploding higher and stocks are crashing lower. Algorithmic traders and aggressive momentum traders take their cues from a five day ema. So as long as a stock is closing beneath a five day ema, you want to avoid buying it. Once the stock closes above the five day ema, you can look for a short term buying opportunity. But remember, while the five day EMA represents the make or break line for strong short term momentum, don't be fooled into believing a break above the five day EMA constitutes a long term trend reversal. A break above a five day EMA is merely an indication that the environment is ripe for a short term relief rally. Bear Market Rule 3 Take quick profits when we're in a bear market, the goal is to buy stocks on a bounce like in Rule 2. But the most important thing to remember is that the overall trend is still bearish. Simply put, as soon as you buy a stock, you need to know when and where to sell. You already know that you need to wait for a stock to close above its 5 day EMA before you look for an opportunity to get long. The second step in this process, assuming you've bought shares in a stock that's closed above its 5 day EMA, is to identify the 10 day EMA and 20 day EMA. These will be your upside target areas to sell your stock. The temptation to hold onto a trade as it clears the 20 day EMA will be challenging to resist, but during bear markets, the 20 day EMA often acts as a significant stumbling block for stocks trying to regain their footing. A typical setup in a bear market bounce is for a stock to trade above its 20 day EMA during the trading day, only to sell off into the close of trading, ultimately closing back beneath that pivotal moving average. Bear Market Rule Number four Never ignore your stops. In bull markets, stop losses prevent you from giving back hard earned gains. But in bear markets, stop losses earn their stripes by keeping you from losing vast amounts of money. Here's how to utilize stop losses when buying stocks within the context of a nasty bear trend. After your initial investment, a close back beneath the five day EMA would serve as your stop. If your stock closes above a 10 day EMA, your revised stop would be a close beneath that EMA. The same applies to a 20 day EMA. The bottom line is that we want to stick to our stops to keep profits from vanishing and to avoid turning a small loss into an account crippling event. Bear Market Rule 5 the worst four letter word in Bear Market Trading when it comes to investing in a bear market, hope is a four letter word and not a good one. Investors having watched their stocks sink for several weeks have a habit of believing every bounce is the beginning of a new bull market. You must avoid thinking like this. Emotions like hope, fear and greed will cost you a fortune in bear markets. That's why we utilize moving averages and stop losses to guide our investments. Remember, neither moving averages nor stop losses are affected by our often irrational emotions and Bear Market Rule 6 the Light at the End of the Tunnel do you know what every bear market in American history has in common? They all eventually ended. An essential part of bear market investing is recognizing when it's time to shift our strategy back to the bull market playbook. Here's what you need to know. As stocks stabilize above their 200 day moving average, the bear market playbook needs to be placed back on the shelf and the bull market playbook needs to be dusted off. However, as long as stocks remain beneath the 200 day simple moving average, we want to stick to short term investments utilizing the 5 day EMA, 10 day EMA and 20 day EMA to guide our actions and manage our risk. Bottom line, Know what market you're trading in and adjust your playbook accordingly. Stick to my 13 rules for trading in any market. And you should see some steady profits flowing in no matter what direction stocks are moving in. You just listened to part two of the post titled My Top 13 Rules for Profitable Trading in Any Market by Bob Brine with JamesAltucher.com the New Year.
- [10:15]
A
Gets people thinking about finances. Building an emergency fund, saving for a home retirement. Done just tracking past spending.
- [10:23]
B
Want a tool that helps you actually achieve those goals?
- [10:26]
A
Set yourself up for financial success this year.
- [10:29]
B
Monarch is the all in one personal.
- [10:31]
A
Finance tool designed to make your life easier. It brings your entire financial life, budgeting, accounts and investments, net worth and future planning together in one dashboard on your phone or laptop.
- [10:43]
B
Be aware and in control of your.
- [10:45]
A
Finances this year and get 50% off your monarch subscription with Code Optimal. I've been using Monarch for years. It keeps me focused on moving forward, not feeling bad about past spending. The savings projections help me make decisions that actually move the needle. Set yourself up for financial success in 2026 with Monarch, the all in one tool that makes proactive money management simple all year long.
- [11:10]
B
Use code optimal@monarch.com for half off your first year.
- [11:15]
A
That's 50% off your first year@monarch.com with code optimal.
- [11:22]
C
Reggie, I just sold my car online. Let's go Grandpa. Wait, you did? Yep. On Carvana. Just put in the license plate, answered a few questions, got an offer in minutes. Easier than setting up that new digital picture frame. You don't say. Yeah, they're even picking it up tomorrow. Talk about fast. Wow. Way to go. So about that picture frame. Ah, forget about it. Until Carvana makes one, I'm not interested.
- [11:46]
B
Car selling made easy on pick up. These may apply One of the things I like about this show is the variety of content we feature about personal finance. Personal finance is personal and there's no one size fits all when it comes to money management and how we choose to invest. I personally have chosen not to engage in day trading. It simply doesn't align with my personal finance goals, skills or preferences. But if you're interested in day trading, I hope this article was helpful to you. Before I knew anything about investing, I would see content like what I read to you today and feel that investing was too complicated for me. If that's you, keep in mind that day trading is just one way to profit from the stock market. Day trading is the act of buying and selling a financial instrument within the same day or even multiple times over the course of a day. The goal is to take advantage of small price moves, but what I do is a much more hands off approach. I'm a long term passive index fund investor. Rather than picking stocks and constantly watching for signs when I should buy or sell, I just consistently buy and hold an index fund which is just a basket of stocks that tracks the return of a market index like the S&P 500, for example. Rather than taking advantage of small price moves over a day, I'm investing to take advantage of big price moves over decades. And these two approaches aren't mutually exclusive. You can be a more passive long term investor with your retirement vehicles, for example, and then trade for fun with a smaller portion of your portfolio. That's a wrap for another Monday show. Have a great rest of your day and start to your week and I'll be back tomorrow where your optimal life awaits.