Traders who are strong holders do not allowed themselves to be caught in a poor trading position. They are usually satisfied with their trading position, they are not easily shaken out on sudden down moves or sucked into the market at or near the tops. Strong holders are basically strong because they are trading on the correct side of the market. They spend many hours learning and trading small in the beginning and now can better read the market and know how to trade it.
Strong holders take losses frequently but those losses are low because they are willing to close out any poor trade fast and take account of these losses along with other trades which are generally much more profitable. Most importantly, strong holders keep journal of their trading activities and learn from it.
Weak Holders
Many traders who are new to the market or failed to journal their trading activities and learned from it, very easily become weak holders as they cannot really accept losses when they see their money rapidly disappearing. Weak holders are those traders who have allowed themselves to be locked down as the market moves against them. Instead of executing their stop-loss, they are hoping and praying that the market will soon move back to their price level. Such traders are liable to be shaken out on any sudden moves on bad news by the smart money. These traders have created poor trading positions for themselves, and are immediately under pressure or feel stressed out if the market turns against them.
Bull and Bear Market
A bull market occurs whenever there has been a substantial transfer of stock from weak holders to strong holders, generally, at a loss to weak holders.
A bear market occurs whenever there has been a substantial transfer of stock from strong holders to weak holders, generally at a profit to the strong holders.
Trading Business
As a trader, you are entering a business that has attracted some of the sharpest minds around. All you need to do is to join them. Trading on the side of the strong holders requires a means to determine the balance of supply and demand for an instrument in terms of professional interest or lack of interest, in it. You must observe the chart and buy when the professionals are buying (accumulating or re-accumulating) and sell when the professionals are selling (distributing or re-distributing) and you don't try to buck the trend system you are following, then you can be as successful as anybody else in the market.
Conclusion
Unless the laws of human behavior changes, this process flow will always be present and you must be aware of the phenomenon of "Herb Behavior" or commonly known as "Crowd Behavior".
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