Bull bear market

If you hear the phrase “its a bullish market” or a “bearish market” its simply referring to whether there is a rising or falling trend in the market.

• a bullish market refers to a market that has a long-term up trend. For a market to be bullish, investor confidence must be high and the market’s respective country will likely be showing solid economic growth. The number of stocks traded in a bull market is often high.
• a bearish market is referring to a market which has a long-term downtrend. A bear market will often arise when its respective country is in recession. The number of stock traded in a bear market is often low.

One theory as to where the bull and bear market got their names is due to the way the animals attack! A bull throws its horns up in the air and a bear swipes down at its prey.

A market usually gets labeled bullish or bearish after it has risen or fallen by over 20%. It is also important to note that stock markets generally fall quicker than they rise. This is because human fear of a loss is a stronger emotion than human that the satisfaction of gain!

Example

DJ30 Bullish market | June 2006 – June 2007

Example

S&P500 Bearish market | April 2008 – May 2009

(Screenshot courtesy of www.freestockcharts.com)

It should appear obvious but a general rule you should follow is to buy in a bull market and sell in a bear market, especially when swing or position trading. Its always hard work making money going against the overall trend.

Want to get some experience in trading shares (using virtual money) then open a fantasy trading account.

Want to know how to buy shares? Check out our step by step guide to buying shares.

Want to know how to make money when a share falls in value? Check out the shorting stock section.