Knowledge Centre

Common Trading Strategies of Bull Market

Updated on 31 January 2017

Stock market passes through various phases like bull phase, bear phase, consolidation phase, etc. It is important that investing in stock market should be adjusted according to the market phase. The bull market is the most liked phase by the investors. Our research team provides stock market strategies that work during the bull phase. An investor can opt for any of the below strategies based on his suitability:

  • Invest and Hold: The bull market is known for taking the prices of stock to new high levels. Good profits can be made in a bull market by making fresh investment in stocks and continuing to hold the stocks in the portfolio. This strategy is aggressive and involves adding shares to the portfolio with every increase in the price of the share.
  • Cover Short Positions: Since in the bull market the index and share prices rise, it is advisable to cover the short positions. Short positions are formed when the investor expects the index or stock to fall. Therefore, covering the short position should be done immediately when the market enters the bull phase. If the short positions are not covered in a timely manner, it can result in animmense loss.
  • Call Option: A call option represents the right to buy a stock at a particular price at with premium for a particular time period. In a bull market, call option buying is preferable where the stock prices are anticipated to rise.
  • Add at the time of Correction: In a bull market, the traders need to be aggressive. Whenever correction takes places in the market, the investor should add positions and buy additional shares in the portfolio in anticipation that the stocks will climb higher when the uptrend begins again.
  • Intra-day Trading: The bull market offers tremendous opportunity for intra-day trading i.e. same day trading. The investor can use same day’s swings to earn profits.
  • Find the Hard Hit Stocks: During the bull phase, investment should be made in those stocks which have fallen more in comparison to other stocks because the recovery will be faster in such stocks. Like if the small caps have fallen more than the large caps, then the investment should be made in small caps instead of large caps.
  • Know When to Sell: When the euphoria of bull enters the last stage of the bull market, it is the right time to sell the stock. The last stage of bull phase is one where the market starts falling gradually. The market during this period starts forming lower tops and lower bottoms. So exiting the stock is advisable.

Our research team at Indices Master are highly qualified to suggest the perfect strategy in the bull market based on your portfolio size and investing ability.