What's the best trading strategy to use in a market like this?
Day trading? Buy & Hold? Etc.?
Answers
3963 points
MNSL answered 10 months ago …
I think best trading strategy is trade, buy, hold and sell.
Some sectors should sell now. Some sectors should buy and hold. Some sectors should trade.
There are plenty of short terms, medium and long term opportunities now.
It is time to invest and hold in companies with less debt, demand for their products, companies which are going to benefits from the current mess and next most promising next rotating sectors.
Some sectors will become very profitable in the next 18 months and next 05 years.
4085 points
EthanR answered 10 months ago …
Dave, you should have positions that are both bullish and bearish. One of the easiest ways to do it is to have a handful of stocks that are long, and then to short term trade the double short ETF's, like QID, DXD, SDS, or MZZ. When you get a nice profit in the double shorts it probably means the longs are oversold. Take your profit and let the longs rally, then re-buy the double shorts.
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989 points
rvilmur answered 10 months ago …
It is too early in the recession to take straight long term positions to hold for gains. What I like to do is find stocks that I do want to own long term and then sell front month or next month out of the money high priced puts ( have implied volatility over 90) on them and receive the premium and keep my cash in my account. Do not do this if you couldn't outright buy the stock you are selling puts on.
If the stock drops below the strike price on option expiration you will be assigned the stock but you will already have the put premium to lower your cost basis below the strike price.
If the stock is stagnant or rises the puts will expire worthless and you can use your account cash to write more puts on the same stock or another stock which you might like to own.
This strategy has the same gain loss profile as a buy-write strategy but you haven't spent your cash yet to do the buy; so it is a somewhat conservative strategy to use for your cash as you wait for the next bull market.
