Whether as a novice or an expert, it’s important to decide whether the market is a bull or bear. If these two words sound new to you, you’ll want to continue reading.
A bull or bear market will operate in favor of investors or traders if they know what, and it doesn’t matter what kind of trading you do. By spending time studying your trading platform (see some of these ECN forex options) and using the following tips below, you can decide if you are joining and using a bull or bear market.
The Bull Market
A bull market is when prices are rising or projected to increase. Although you commonly use this word for stock market, you can use it for anything exchanged, including forex trading.
You will see a bull market as optimism. The bull market’s future intensity appears to last for several months or even years. There’s no way to quantify a bull market. However, several investors agree on this description: stock prices increase by 20 percent, usually after a 20 percent decline and a second 20 percent decline.
The most prominent example of a bull market was 2003-2007, shortly before the market collapse in 2008.
The Bear Market
On the other end of the spectrum is a bear market with declining prices or future expectations of declining. It’s also associated with weakened economy. A bear market appears to be very volatile with large price volatility and can last months, even years. A bear market appears to happen earlier than a bull market.
There have been some recent bear market examples. The most prominent is the financial crisis that starts in 2007 until 2009 (about 17 months). But most recently, March 11-12 of this year, when Covid-19 rampaged the planet.
How To Spot a Bear or Bull Market?
Once you understand the difference between a bull or bear market, when you’re in one, it’s easy to understand. However, are there symptoms of watching a bull or bear market?
In a bull market , investors tend to be optimistic in the stock market and tend to keep their position longer. If you see investors getting relaxed and buying to keep, you’re in one or entering a bull market.
On the other hand, if investors are concerned about falling prices and reluctant to take the chance, this may be a sign of approaching bear market. When the market is unpredictable, investors will make changes they normally wouldn’t do and are less likely to hold on to long-term investment.