What the Bear and Bull Markets Are All about

In forex, you’ll likely stumble across the words bear market and bull market. Common as they may be, there are a few investors who still don’t know what they mean. If you’re among them, take the time to get familiarized. To help you out, here is a brief discussion on both markets.

Bear and Bull Etymology

The terms bear and bull in stock exchange is derived from the manner the said animals attack. A bear’s tact is to swipe down his opponent whereas a bull’s is to thrust its horns upward. As both actions are similar to the rise and fall of prices as well as to how an investor makes decisions, they were made to relate metaphorically to movements in the forex market.

Bear Market

Pessimism is what prevails in bear markets. Often, they begin when there is an immense drop in the prices then eventually when matters improve, they’d be unrecognized because investors carry the mindset that they will turnaround later on. As an effect, the economy is weak and the unemployment rate decreases. No consumer wants to spend money because he doesn’t see the point in putting in funds for something he is almost sure won’t be profitable.

Bull Market

Investors in bull markets are optimistic people. As a result, the unemployment status tends to stay at a low level and the economy is solid and strong. Consumers spend money and allow businesses to profit. Everything is going well. This results to more investments made because those who have money to risk feel good about the odds of them collecting a fortune later on.

The Bull-Bear Line

The moving average for the past 250 days for traders is referred to as the bull-bear line. In forex, it indicates whether the prices will go up or go down. It serves as reference for long-term investments because in the event that the current trends fall below the line, it’s a hint that the market will turn from bearish to bullish and if it’s the other way around, from bullish to bearish.

The Dow Theory

According to Charles Dow, a legendary editor of the Wall Street Journal, the fate of forex markets is either bearish or bullish and that it depends on people. Even if there will be a reversal in the trends, investors shouldn’t base their decisions too much on what might happen and instead focus on how they can impact what’s going on. If they have high hopes of making it big, they should tame themselves to think more of the positive results.

Usually, bear and bull markets are measured in years. If prices either go up or go down, the status of things will stay a certain way for a while. It’s a reason investors tend to be affected. Because both are for long-term results, you may want to look into them.

Created by Admiralmarkets.in, A Forex trading broker from India

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