Trading with the Bulls.

I can undertsand the difficulty for most traders when trying to take a bullish position. We have been in a bear market for the past 13 months. There have been significant rallies yet, the main trend has been down with the Nifty falling from 6320 to 4640.

Now, the market is going up. The key question is: Is this  bear market rally or is this the beginning of a new bull market?

Experienced traders will immediately realize that the question posed above does not have a reply as of now. The Index will confirm a new bull market when it closes above 5400 beginning a new pattern of higher highs. Since this event has not yet happened, there is no way to suggest that we are in a bull market.

Traders should attempt an answer to this question with another question. They should ask themselves: What is the time frame of their trading? If  you are a day trader,then the current upmove is actually a roaring bull market. If you are a swing trader (few hours to few days) then the trend is clearly up since intraday charts have visible up trend and bullish signals. If you are a position trader with time horizon running from months to years, then the trend has not changed to up. So, there is no rush to buy.

One way of trading with the bulls is to understand our time frames. If we are into short term trading, then the longish bear market is not relevant, which the current up move is relevant. A second point in trading with the bulls is to accept what the market wants to do. If your trading strategy is to buy dips in an uptrend, then you should buy the dips that are coming in now. Accept the wisdom of your trading signals.