Fly Fishing the Stock Market: How to Search for, Catch, and Net the Market's Best Trades

TRADING AND POSITION SIZING IN VOLATILE MARKETS

Use smaller positions with less money at risk during volatile bear markets.

Do your due diligence, plan your plan, use good money management, put the money at risk, and then have confidence in the outcome, realizing that you will be stopped out one out of three times. Let your system operate despite the daily ups and downs. Volatile markets require and demand that the trader stay calm and control his emotions if he is to be successful. Absence of this quality is precisely why both bulls and bears quite frequently are decimated in major bear markets.

Stand aside in choppy markets, or shorten your holding period. Lower your expectations. Wait patiently for the set-up.

Don't chase stocks in a tired market ready for a pull-back. Remember the tendency for the market to post 3-, 5-, and 8-day reversal patterns.

Be patient in a market that is oversold! You can usually get your price. If not, scratch the trade. It's okay. Move on to the next opportunity. Wait for the market to show strength before leaning into it with larger positions.

Mistakes are part of the game. Analyze them just enough to understand what went wrong and what could have been prevented—don't dwell on them. This degree of introspection is healthy and constructive toward progress. Self-ridicule and obsessively dwelling on losses are, on the other hand, destructive and will take you out of sync, leading to more mistakes the next time around. In golf, each hole is a game within ...