I know how you feel. You're looking at the market and you just don't know where it is headed in the coming days, weeks, and months. We all know where it is headed in the years and decades. Based on historical data, until such time as it is proven incorrect, the market goes up over the long term. If this rule is ever broken, then we will have much bigger problems than poor portfolio performance.

In these uncertain times, however, the tried and true style of investing that has worked for years may be faltering. If the strategies you have been using for years are still getting you market-beating performance, then by all means stick with it. Like most of us, though, market-beating performance means we have only dropped 15% instead of the market’s 20% fall from last year’s highs.

While it is true the market goes up over time, the same strategies may not produce market-beating results. Have you been using the same strategies for years? Have you noticed the results have not been consistent over longer periods of time? The reason for this is really quite simple: the market is almost like a living, breathing being and has adapted to various conditions over time.

There was a time when the way to make money in the market was to buy dividend-paying stocks and hold them for the long term. Kings of the day were companies like International Business Machines Corp. (NYSE: IBM, Stock Forum) and Caterpillar Inc. (NYSE: CAT, Stock Forum). The market was growing slowly at that time, and price appreciation was limited so dividends were necessary for long-term gains.

Not so long ago, the way to make stellar gains was to buy rocketing stocks and hold on tight. These stocks were flying high and it looked as though there was no way to stop them. Many of the companies had little or no earnings, and even fewer paid a dividend. Companies soaring high included the likes of Amazon.com Inc. (NASDAQ: AMZN, Stock Forum), Priceline.com Inc. (NASDAQ: PCLN, Stock Forum) and even Microsoft (NASDAQ: MSFT, Stock Forum). There were many, many others who are no longer with us.

This was a time of great price appreciation. Even the stocks of old were swept up in the frenzy and saw their prices soar. This, too, came to an end and many people lost a lot of money. They assumed the current trends were a long-term shift in the characteristics of the market. They were wrong, just like the buy-and-hold-forever crowd before them. What both groups failed to realize was the market evolves, grows, and adapts to new conditions.

We are seeing the end of one of the longest bull markets in history and the game is changing. Your trading and investing strategies need to change as well. The days of buy and hold are behind us, at least for a while, and long up-trends are probably taking some time off as well.

This kind of market requires you to step out of your comfort zone and learn some new tricks. Here’s your first new trick and one of my favorites – the debit spread. This is the kind of market where I like to use the spread trade as my primary investment vehicle. The trades are typically shorter term and have a defined gain-and-loss profile. You miss out on the huge upswings, but don't get crushed by huge downturns either.

Energy, tech, and financials are all sectors in flux. Money appears to be flowing pretty freely between them. When the money is moving around like this, I like to take positions with a nice cushion in case of a drop. Looking at some of the former high flyers, AMZN has some nice-looking trades in the current market.

If you are looking for a hedged trade on AMZN, consider a September 62.50/60 Call Debit Spread for a 2.15 debit. The stock could fall over 17% and the trade would still generate its potential 16.3% return.

If you are new to options, debit spreads are a good place to start. Since you pay to open the position, the cash you used to open the position is all you have at risk. Also, we are offering Tuesday and Thursday webinars to help you learn a few more tricks, and each webinar includes a live trade. If you are a subscriber, you will get a webinar invite. If you are not a subscriber, to learn more go to www.iotigo.com/webinar1.

This week Investors Observer covers:
How Could Being A Smarter Investor Help Your Portfolio Grow?

Articles:
* Is It Back-to-School Season Already? + Lee’s take on JCP, SPLS, SHLD, KR, MMM, AAPL, and BUD
* The Cost of Investment Education
* Can You Still Profit In A Bear Market?
* Can You Teach an Old Investor New Tricks?

Click here to read any of these articles.

Vic Wisemann is an equity option strategy analysts with Investors Observer. Mr. Wiseman manages several portfolios for the company and comments weekly on his insights, strategies, and tactics for playing the market to win.

DISCLOSURE: Mr. Wisemann owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he discusses in his articles.