All traders need to set up an effective risk-management strategy in order to minimise risk if the markets go against them. This is less of a problem in a bull market when there are likely to be opportunities to recoup former losses by buying a security as it is revalued higher. But trading in a bear market can be more difficult. To keep your head when everyone in the financial market is stampeding towards the exits requires the ability to be decisive and act quickly. And this has to be backed up by a solid understanding of the technical resources that are available to help manage your trading account.
The standard trade management tools apply in a bear market. In particular, that means ensuring appropriate trade execution orders have been used. A stop-entry order is simply an order to buy or sell a security when its price moves past a particular point. A limit entry order can help to diversify a trader's game plan by making it possible to short into rallies in a bear market. These orders bring some predictability to a trading strategy by making sure trades are executed at a predefined price. Some traders prefer to take more active control of their account and not to be automatically taken out of their position.
Stop-loss orders are a useful tool to close an open trade that is going against you at a predefined price level to limit the loss of capital. However, markets can move fast and this is often the case when they turn bearish. Bear markets don't head down continuously – prices may pull back from time to time. This means traders may risk being stopped out when the market was simply consolidating, rather than making a fundamental shift.
Traders aren’t always guaranteed to get closed out at the price they set their stop-loss orders at, which is known as slippage. The faster the market moves, the greater this slippage can be. To circumvent this, you might choose to trade an option with a strike price where a stop-loss would have been located. This could allow you more time to evaluate whether or not you are truly in a losing position.