What You Need to Know About Bull Market vs. Bear Market
But what if I told you that this so-called “randomness” is actually a well-studied lifecycle that we can predict and account for in our trading decisions?
The stock market can seem like a game of chance sometimes.
If you’ve been around for long enough, you can’t have failed to notice that the economy goes through booms and busts,
and these are known as bull markets and bear markets for our investments.
Let’s take a look at what bear and bull markets are, what to expect from them,
and how to react to them for maximum profit.
What Is a Bull Market?
Technically, a bull market is defined as a time when prices rise — generally by 20% or more. This trend then continues over time.
What Is a Bear Market?
The mechanisms here are very similar to those found in a bull market, except for everything happens in reverse: prices decline, so more investors sell.
Understanding Bull Markets and Bear Markets
Bull markets and bear markets shouldn’t be looked at in isolation — they both form part of the economic cycle.
As we’ve discussed already, bull and bear markets can refer to any kinds of investments, assets, or commodities.
so at any given moment, there may be a bull market for cryptocurrencies yet a bear market for stocks.
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