Of the previous three currency bear markets as measured by the Euro - see Figure 1 -- two happened very fast and ended quickly, while the last one lasted a little longer, yet only because it had counter-trend up-moves between sell-offs. The impulse sell offs in the 2011-2012 bear move were as fast as those seen in 2008 and 2010 and just as difficult to trade. The lesson here is that sell-offs in financial markets are generally corrective in nature, which means heavy volume and rising volatility - the opposite conditions seen in bull markets.

(click to enlarge)
Figure 1.

Given markets trend less than 30% of time, and most traders focus on counter-trending or mean reverting tactics, when large fast sell-offs do occur a good many traders are left behind, because they just aren't accustomed to, nor trained for operating in a full blown trending environment. This however has not always been the case. Orderly bear markets have, and presumably do occur.

Figure 2. 2000 Bear Market in Stocks

An orderly bear market, along the lines of, say, the 2000-2001 bear in U.S. stocks, would be a great turnabout - see Figure 2. That bear market was preceded by a relatively orderly bear market in Euro currency - see Figure 3 (extrapolated from the old D-Mark).

(click to enlarge)
Figure 3. Bear Market in D-Mark

We can't think of anything more exciting than an orderly, trending bear market and would welcome that more than even an early spring and a record salmon run!

Jay Norris is the author of The Secret to Trading: Risk Tolerance Threshold Theory

Trading involves risk of loss and is not suitable for all investors.