Statistics show that in a bull market about 75% of the stocks will follow the general trend and go up, and in a bear market 75% will also go down. Trading with the trend is the best way to trade as 9 out of 12 stocks will follow the trend and give you the best chance of making gains on your stock purchases.

But what if you own some nice stocks and don’t want to sell when the market is clearly going down, or about to go down?. There are a few tactics that you can consider, both of which involve the use of options, CALL options and PUT options. There is the well known strategy called Covered Calls, and the much lesser known one called the Married Put.

If you are going to trade options it is important that before you start trading you get the best option trading education that you can. You should also practice stock trading until you are comfortable with the process. This is a very important point that must be taken seriously, if you don’t understand the terminology and theory then you should not be trading options. If Put option, Call option, Married Put and Covered Call are new to you then don’t trade until you have studied sufficiently.

Selling calls against your stock in 100 share increments is the basis of the covered call strategy and it can provide about a 2-7% buffer against the loss in stock price. However a bigger drop in the stock price will not be compensated for using the covered call strategy, in general.

Stocks in a bear market, and even in a bull market, can drop quickly on news or earnings releases, as much as 15 to 45% within a month. Using covered calls to protect your stocks will only provide limited protection of less than 7% at best and so will not save you if the stock takes a 40% tumble.

The better solution to providing downside stock protection is the option strategy called the Married Put. As the name suggests the PUT that you buy is used to provide protection when the stock goes down because Put options increase in value when the stock decreases in value. The term married is used because the option that is selected has to be very compatible with the stock, in other words a good match, if the strategy is to work.

The selection of the best Put option is not straight forward and involves several criteria which are listed below:

1. The strike price of the option

2. The current share price

3. Choice of options, in or out of the money

4. Put expiration time

Even though the married Put protection only has a short life span if offers much more protection than the covered call. It can provide as much as 95% loss recovery in the event of a significant drop in the stock price.

The downside of the good protection is that you have buy the Put which is a cash debit whereas the covered call is a credit. But there are ways of off-setting this expense and there is much more to this strategy when executed correctly. The Married Put can be made to just about pay for itself and used to generate very good gains if the market, or stock to be specific, moves a lot.

The general idea of the Collar Trade is to combine the covered call and married Put strategy into one, this is what is called the Collar Trade. In effect you put a collar around the stock, sell a call and buy a PUT. If you do this correctly most of the cost of the Put can be offset by the credit from the covered call so you can protect your stock at almost no cost. Yes this is a great strategy which the general public is unfortunately ignorant of, and most brokers don’t understand.

The strategy that I have outlined above is unknown to the average stock market trader but is one of the best trading systems you could have.

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This is  an update in the stock market for the short term and long term. From January 1 through today the market is up a positive 6% and the one year rate is down a negative 22%. The stock market is currently above its 1 year average which is the average price over the past 12 months.

The short term direction of the stock market trend is positive. The 1 year average of the stock market is the trend setter for how the market is doing at any present time. It gives investors of mutual funds the update by knowing if the market is going down or up. It is a cross between the short and long term direction of the market that shows when the market is turning positive or negative.

Investors should have switched from mutual funds to money market funds when the stock market reached its first 1 year low in early 2008. At that time the market was also under its 1 year average. The decline in 2008 could take years to make back the loss in value to retirement accounts. Asset allocation is when the investor transfers from declining mutual funds to safe mutual funds. This can only be done by understanding the stock market trend.

Economists agree that the recession has seen its worst but they also agree the economy is not as healthy compared to 2003. The stock market will continue to have its rise and fall in rallies but a long term bull market is still not insight.

Mutual fund companies are buying now because of the low prices. To say the market will finish 2009 in a positive percentage is not guaranteed. The Commerce Department has released the second-quarter gross domestic product report which says, “including the April-to-June period, the economy has now contracted for a record four straight quarters, for the first time on record dating to 1947″. The key to a sucessful retirement plan is to finish every year in a positive percentage rate.Mutual fund companies are buying now because of the low prices. To say the market will finish 2009 in a positive percentage is not guaranteed. Economists agree that the recession has seen its worst but they also agree the economy is not as healthy compared to 2003. The stock market will continue to have its rise and fall in rallies but a long term bull market is still not insight.

But there is another way. You could mange your own investment strategy. You will obviously take great care to protect your assets.

There’s several things to pay attention to to make sure that this is happening.

First, you may have head or read about a bear and bull market, but may not know exactly what that implies.

The stock market is monitored on a month to month and an annual basis. Each year, the graph is marked at the low point of the year and the high point of the year.

A bull market occurs when the market rises above the one year average and one year high.

The bear market is the opposite, when the current numbers are below the one year average and one year low. Being aware of this is critical to managing your portfolio. 

The bull and bear are really the foundation marks for deciding on how to proceed with your money management strategies.

If you are going to be successful in the stock market then you must be aware of the risks and be able to adjust accordingly. It is highly recommended that you subscribe to a reliable stock report that lets you monitor your investments on a monthly basis. It isn’t necessary to watch the market on a daily basis, because the fluctuations tend to obscure the stock market trend.

After about three months, you should start picking out the trends and be able to make some decisions. Then create a benchmark to see how well you are doing. As an example, compare your success against the S&P 500.

If you see that a bear market is in play, you should think about transferring your funds into a lower risk portfolio, such as a money market, and wait out the storm.

If you see a bull market forming, then consider moving you money into more growth oriented mutual funds.

Certainly, there are other things that you need to know to manage your own money. However, understanding basic investment strategy and the way that the stock market performs can be a great start to managing your money on your own.

As you become more experienced, you’ll start to develop a feel for the process and have a better understanding of the many nuances that occur within the market.

Being aware and managing your own investment strategy is the best way to make sure that your funds are actually making you money.

You do need to be conscious of a number of factors to make sure this happens.

First, you’ve likely heard people talk about a bear or bull market, but may not really understand what that means.

The stock market is tracked on a month to month and an annual basis. And on the yearly graph, we can both the high point and low point that the market has reached.

A bull market occurs when the market rises above the one year average and one year high.

The bear market is the opposite, when the current numbers are below the one year average and one year low. Knowing how this cycle works is essential to your investment strategy. 

The bull and bear are really the foundation for deciding on how to proceed with your money management strategies.

If you are going to be successful in the stock market then you must be aware of the risks and be able to adjust accordingly. You should definitely subscribe to a reliable stock report that lets you track your funds on a monthly basis. You should avoid looking at things day by day, however, because the fluctuations make it harder to see the stock market trend.

Give it three months and you should start pickout the overall trend and be able to steer your strategy accordingly. Many people recommend tracking your own performance directly against the S&P 500.

If you see that a bear market is in play, you should think about transferring your funds into a lower risk portfolio, such as a money market, and wait out the storm.

When a bull is developing, move to funds with a higher return like the S&P stock funds.

Obviously, there is much more to the successful self management of your money. But a knowledge of the basis strategies and the workings of the stock market are the first steps to taking control of your own investment strategy.

As you become more experienced, you’ll start to develop a feel for the process and have a better understanding of the many nuances that occur within the market.