What are Bullish and Bearish Markets?
In simply words, a bear market is the one which prices are heading down and a bull market is used to describe conditions in which prices are rising.
Bullish Market
A bull market has no specific definition but, is the condition of financial market in which prices are expected to rise or they are rising. The “bull market” is often used to the stock market but it can apply also to bonds, real estate, currencies and commodities. Typically, a bull market is occurring when prices have risen 20% or more from a recent low. Lastly, a bull market can last for years.
Bearish Market
To be bearish it means that prices will be falling over a period of time. Typically, a bear market is occurring when securities prices fall 20% or more from recent highs. In addition, they are associated with declines in an overall market or index such us S&P 500, however, individual securities or commodities can also be considered to be in the bear market if they experience 20% decline or more over a period of time, it lasts two months or more.
Why Does it Matter to You?
One of them main advantages of Forex trading is the opportunities offers to traders in both bull and bear markets. Forex trading is always done in pairs, so when one currency weakens the other straightness, and therefore it allows you to take the advantage both when the markets are rising and when they are failing.
It is important to determine the trend of currency markets. Bering aware of market trends allows you to make the best risk management decisions and better understand when is the best time to enter and exit a trade.
The bottom line
It is very difficult to predict when the transition from bull market to bear market will occur as the stock market has experienced long periods of growth (bull markets) and decline (bears). Over time, the best strategy for dealing with market changes has been long-term strategic asset allocation. Working with a financial advisor to create a diversified investment portfolio can help you navigate tough markets, avoid the near impossible task of market timing and make rational rather than emotional investment decisions.
