Trading Advice in a Restricted Environment (?)

[kmiklas]

Hi,

In my country short selling is prohibited so I can only have a momentum long only. When the market is so bearish that long position is impossible, what alternatives are there other than keeping cash?

Any advice or suggestions on what trading strategies work well in such a limited environment?

Thanks

What does the bond market look like for you? When a company’s stock plunges, sometimes they’ll look for ways to get ca$h quickly, and may issue a high-yield bond to offset the stock losses. You might be able to pick up a nice bond with a fat 12% (or higher) yield. You also get paid first if they go bankrupt.

Since your markets are locked down, bonds are another way to capitalize on a company taking a plunge… and bonds are typically not watched as closely.

I would also look for alternative trading venues. Prohibiting short selling is intolerable for me. Too restrictive.

 

[TheDawn]

Hi,

In my country short selling is prohibited so I can only have a momentum long only. When the market is so bearish that long position is impossible, what alternatives are there other than keeping cash?

Any advice or suggestions on what trading strategies work well in such a limited environment?

Thanks

Are options allowed in your country? If yes, buy put. You can also hedge or simply just not invest when you suspect a stock is bad and put the money in safer investments like savings deposits.

 

[tomkat22]

Like Cramer says "There's always a bull market somewhere". There's been a few stocks that have had nice bull runs lately, AXSM,NERV,PDD,etc. Just need to find them before their run peters out.

 

[smallAxe]

Correlated nearby market if allowed/or exist. Volatility products, again correlated nearby. Will require lots of capital and could very well not be possible. One possibility is always dynamic hedging - replication of the negative delta option by reducing size. May not be perfect, but some hedge can be better than no hedge. The huge cost is in time to monitor. A small account it may simply not be feasible.

Thank you,

Exiting my market seems impossible, I still trade with that small account, about $9,000

Yes, I run a strategy that lower my exposure to the market gradually as the bear come along, until I get kicked out and only end up with cash.

I was hoping to be able to hedge by executing a strategy on the stock market when the market was bearish, long trading only. But haven't found anything yet.

Do you think mean reversion that only trades the long side, works in individual stocks when the index is bearish?

 

[smallAxe]

Shorten your time frame.Are you allowed to day trade? Day traders make money in any market.

Thank you,

Day trading is allowed. But I can't underestimate the game and overestimate myself. Currently I am still working daily to accumulate a solid capital base before trading for living.

I held positions for a few weeks because I could only take daily data and build models from excel sheets.

 

[smallAxe]

@smallAxe,
I am not too far from you. I trade mainly US stock using IBKR. This is just my opinion. The stock market in this region is not easy for trader.

Thank you @Peeter8519,

But the IBKR site is blocked here. I'm just a little worried for that one. Which stock market do you mean by "this region" is not easy? Is it US or Indonesia?

 

[smallAxe]

What does the bond market look like for you? When a company’s stock plunges, sometimes they’ll look for ways to get ca$h quickly, and may issue a high-yield bond to offset the stock losses. You might be able to pick up a nice bond with a fat 12% (or higher) yield. You also get paid first if they go bankrupt.

Since your markets are locked down, bonds are another way to capitalize on a company taking a plunge… and bonds are typically not watched as closely.

I would also look for alternative trading venues. Prohibiting short selling is intolerable for me. Too restrictive.

Thank you very much @kmiklas,

Buying corporate bonds requires a large capital base. The minimum unit purchase of bonds is around $7,000, making it difficult for individual investors to invest in properly diversified bonds.

I was hoping to be able to hedge by executing a strategy on the stock market when the market was bearish, long trading only. But haven't found anything yet.

Do you think mean reversion that only trades the long side, works in individual stocks when the index is bearish?

 

[smallAxe]

Are options allowed in your country? If yes, buy put. You can also hedge or simply just not invest when you suspect a stock is bad and put the money in safer investments like savings deposits.

Thank you,

No options. Only stocks and warrants can be traded on the regular market.

 

[Andor Manly]

According to me you can first research about the methods available to trade, since you have restrictions for short selling, and you can try normal methods of trading as they work well in my case. Only 10% of trades done by me are short selling and the rest are normal which also gave me good results.

 

[smallAxe]

According to me you can first research about the methods available to trade, since you have restrictions for short selling, and you can try normal methods of trading as they work well in my case. Only 10% of trades done by me are short selling and the rest are normal which also gave me good results.

Thank you

I based my method on the journal Jegadeesh and Titman. I've traded it. Working pretty well so far. I think it's just because I'm trading in a strong bull market. But I'm unprotected in a bear market. When the bear comes, it will be ugly.

I'm trying looking for research,long only method that can be traded in a bear market research. Haven't found anything yet.

It's a hard. It's a hard. It's a hard. And It's a hard rain a gonna fall.