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I need to address something that comes up constantly in my trading room and in messages I get — why don’t I take more bearish trades?
I’ve been doing this since 2000. I’ve traded through the dot-com crash, the 2008 financial crisis, the COVID collapse and the 2022 deleveraging.
I’ve seen the Nasdaq drop 80%, and I’ve watched the market fall 50% in months.
And after all that, here’s what I’ve learned…
The markets have been bullish 55% of the time over more than 70 years of data. That’s not opinion — that’s mathematical reality.
But here’s the part most traders miss…
Bull Markets Last Years, Bear Markets Last Months
Bull markets grind higher for years. Bear markets? They’re generally aggressive, nasty and short-lived. Yes, we can see 5% to 10% corrections happen in days. But then we spend months — sometimes years — climbing back to new highs.
So unless you genuinely believe this market is about to fall 20%, 30% or 50% and stay down there, what we’re really doing is participating with defined-risk trades and giving the market time to do what it does best: find new highs.
That’s the house edge. If you want the true edge in this market, be bullish.
Now, does that mean I ignore downside risk? Absolutely not! But I don’t fight the 55% bias by trading bearish.
I hedge.
How I Protect My Portfolio Without Trading Bearish
Here’s the difference: I don’t need to trade bearish — I need to hedge. And there’s a massive distinction between the two.
I use VIX hedges and index hedges with asymmetric risk-reward profiles. Right now, I’ve got hedges where I’m risking $500 that could potentially pay me $15,000, another $500 that could make $24,000, and one more that could pay up to $30,000.
I even have one hedge with $900 at risk that could pay me $44,000.
Do I expect these to hit? Nope…
In fact, the odds are very low, and I don’t plan on receiving those profits. But my risk is tiny compared to the monstrous potential reward if we do see a 20% to 30% crash.
Now, I’m managing quite a bit more money than probably 95% of the people reading this, so you have to size these things proportionally.
That’s the approach. Stay bullish on my core strategy, but layer in hedges with defined, small risk and massive upside if the market rolls over. I don’t fight the mathematical reality of market structure — I work with it.
And that’s exactly why I almost never trade bearish. The math just doesn’t support it.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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