Are you a bull or are you a bear?

The answer to that question will start you toward making the proper decision in regard to your trading strategy.

BetterTrades students know that you can't take a bullish stand when the market is trending bearish. Likewise, it isn't wise to be bearish when the stock market is trending bullish. It's like washing your hands and expecting the hot water to come out of the cold-water faucet. It just isn't going to work.

What does it matter? It matters plenty if your goal is to make a profit by executing better trades. If you take the incorrect approach, the result could be akin to wetting your finger and sticking it in the electrical socket. You're probably going to get a shock.

How do you decide what to do?

First, understand the temperature of the stock market. Is it going up or is it going down? If it's going up, then it's OK to hop on the back of the bull and take the ride. If it's going down, you want to protect yourself from getting mauled by the bear.

In a bull market people are finding jobs, the gross domestic product is growing, people are buying houses and everyone is happy. There are signs of optimism all over the place. It's easy to pick the right stock in a bear market.

In a bear market people are more pessimistic. Stock prices are falling, unemployment is rising and there is typically a threat of inflation. There is a feeling that stock prices are going to fall.