Life Cycle of Stock Market

Hi Traders,

Is it wise to trade all the time with the same mindset?
No Right.

When we start trading, we do the same things again & again thinking that what we did yesterday, last week, or last month, with the same strategy we try to make a profit out of it & that's the reason most of our capital is either at breakeven or in a negative.
I believe we need to be smart enough to change the strategy according to the type of market we are facing.

Type of Market:-
a. Base:- Where the market is in a consolidation stage, and not appreciated in the market by the trader & investors.
b. Growth:- Market in an uptrend stage, where the market is appreciating the fundamentals such as good earnings, growth & its intrinsic value & realise that it is undervalued.
c. Top:- It is a stage where smart investors know that the market cannot continue forever as the market became highly overvalued & they square off their position & leave the market with a profit.
d. Decline:- It is a stage where the market is in a downtrend. There can be various reason for the downfall, such as a decline in the fundamentals of the companies, War, panic, fear, etc.

Type of Strategy:-
a. Base:-
Short term trading, where need to identify the demand (Buy) & Supply (Sell).
b. Growth:-
long term positions which last maximum to 3 months, (use a call option)
c. Top:-
from a traders point of view, again find out the demand & supply with the mindset that small is good.
d. Decline:-
It is a stage where I make a lot of profit by using margin, Put options, short selling, etc.

So, as a trader, we need to change our trading mindset according to the market phase.
Thank You