What are Bull and Markets?
Traders frequently use phrases like “bull market” and Bear market”. The origin of these two phrases is not known but they represent the upward and downward trend of the market. It is believed that the terms take after the bull and the bear and the way they behave. The bull moves with his head up and hence the terms bull market for the upward trend and as the bear swipes down the downward trend refer to bear market.
These are commonly used terms but it is essential to understand them and be able to read the characteristics of these two terms so that your portfolio is not affected adversely.
The two terms are used to describe the appreciating or depreciating value of the market. If the market is showing an upward trend, i.e., there is a lot of buying then it is a bull market. Conversely, if there is a lot of selling in the market and it is heading south, then it is a bear market.
How to detect if the market is Bull or Bear Condition?
There are other ways too to gauge the market trend. One of the main ways is to determine it by looking at the overall trend for a long period. For example, a two-week trend may show a bear market while a two-year trend may indicate a bull market. The overall slope of movement is upward and when the movement is upward, towards the right, then the market is showing a bullish trend.
The other way to gauge the market trend is to do so by reading the weekly trends, which move diagonally. Here too, the chart has been analyzed for a longer period. But not all the movements can be classified into bear or bull movements. If the market is going through a stagnant phase, then there would be a flat trend.
So, when Trade?
The best time to invest is during the initial stages of an upward trend and sell when the trend reaches a high. This is the time when the trader can make a neat profit and invest at a time when the market shows a downward trend or during a bear market, there are chances of losses.
There is no way, which will tell you for sure how the market trend will move. The terms bull market and bear market are just trading lingo and you should be able to understand the trends of the market by analyzing long terms trends. But as these markets, not the lingo, will have a large influence over your portfolio understand them thoroughly before making an investment.