It is possible to make money trading stocks, even during bear markets, but it takes discipline, good research and a basic understanding of human nature and the group dynamics of stock markets. The number one thing to remember about trading stocks is that you do not have to be right all of the time, just over half the time.
Volatility is Your Friend
A volatile stock (or stock market) is one whose price moves significantly up or down on a relatively regular basis. Being volatile does not indicate a stock is moving either up or down, but just that it is moving relatively large amounts up or down relatively frequently. And since big moves up or down is what a nimble trader makes money on, volatility is indeed your friend.
Trading Overbought or Oversold Stocks
Trading stocks is not rocket science. It is about taking advantage of stock movement patterns. And while often it is not obvious why a stock will move up or down, sometimes it is is quite obvious and largely predictable that a stock is about to move in a particular direction. And trading overbought or oversold stocks is one such situation. The key of course is to identify the overbought or oversold stock and accurately predicting when it will start correct to fair value. There are many factors that play into this process and an example is instructive.
