Bob Lang’s Top Bear Market Trading Tips

For six weeks, the indices (notably the S&P500 (SPX)) have slipped lower, explains Bob Lang from

Sure, there were rallies, but they were short-lived. Sustained high volatility has, at best, made trading difficult. The sharp drops shook the nerves. Continued geopolitical and economic uncertainty has caused sleepless nights. That’s a lot, which is why I decided to put together the best bear market trading tips I’ve published over the years.

These are the same strategies I use to protect (and maybe grow) my portfolio.

Keep in mind that the name of the game is to protect your wealth. Bear market cycles are historically rather short. They have to run their course, so don’t fight it. Without further ado, here are my top bear market trading tips;

Take a break

I’ve written about this many times, but it bears repeating: take a break from trading if necessary.

I’ve been known to take breaks in both bull and bear markets. Sudden up and down movements in a bear market are exhausting and eventually you are exhausted. I’ve seen countless players throw in the towel out of fatigue from endlessly waiting for a trend to set or reverse.

Give yourself a break before the market breaks you down. It’s not easy, and sometimes you’ll feel left out, but I doubt you’ll be permanently scarred by it. In fact, a break is refreshing and allows you to come back into the game invigorated.

Play the market both ways

If you’re in, play the market both ways. This can mitigate portfolio volatility and increase your chances of bank winnings.

Most of us are conditioned to play only on the bullish side. Throw away that playbook. I come to the table every day looking for opportunities on both sides of the market, regardless of the trend. Stocks don’t go up every day, even in a bull market. Stay agnostic and seek opportunities with an open mind. You are more likely to come up with ideas from both sides.

Ignore calls for the bottom

Every time the markets go down again, you can guarantee that a talking head somewhere is declaring it to be the low. If only it were that simple. You won’t know when a bottom has been reached until a new uptrend is confirmed.

Be careful during trade rallies

We’ve seen our share of rallies over the past few weeks. They can be traded, but they require a lot of care, luck, and timing. Be careful when trading a rally and remember never to trade more than you can afford to lose (one of my main risk management strategies).

Always have indexes that work

I always have protection via index puts whether I have long calls or short puts in my portfolio. Bear markets are notorious for their volatility, and holding some protection makes me sleep much better at night. When I don’t have protection that works for me, I worry.

Over the past few weeks, our explosive options portfolio has seen some nice gains thanks to index puts. They weren’t winning monsters, but that’s okay. Modest gains are better than the alternative.

Remember that the goal here is to reduce portfolio volatility. Index put options may not allow you to maximize on a bull day, but you will certainly cut losses on a bear day.

Learn more about Bob Lang at

Comments are closed.