Bull Market

The term “bull market” originates in the distant XVII century, in the stock exchange speculation. Once upon a time there was an English satirist who actively gambled on the stock exchange, the hero of one of his stories was John Bull. His characteristic feature of his appearance was the bullish shape of his head, and his opponent was… a bear. Since then, it has become customary to call traders “bulls” and “bears”, terms that reflect the work of traders — some buy and others sell.

“Bulls” are those investors who bet on a price increase at a certain moment. They earn money by asset appreciation, relying on the fact that assets will now and in the future grow in value.

A bull market is a market with more buyers and prices are rising, and a bear market is a market with more “bears” (sellers) and prices are falling.

Bull Market Development Phases

The bull market goes through several phases of development:

1. The phase of pessimism — characterizes the end of the bearish trend. As a rule, the strong downward movement has already ended, and the mood of trading participants continues to be negative. As an example, the fall of the stock market in 2022, when it was able to win back more than half of the downward movement, can be cited.
2. Skepticism — the pessimistic mood is fading, but market participants are still not sure about the prospects. At these moments, the market moves sideways, since quotes still change slightly in a sideways movement. This is the moment when the price of an asset can increase and then fall again.
3. The optimism phase — investors have a positive attitude, influenced by the appearance of good news and an improving economy. Prices rise steadily, volatility is decreasing — these processes characterize the bull market.
4. The stage of euphoria — the price is rising. Investors are making more and more purchase transactions, however, this phenomenon does not last long, the “bull” market becomes “bearish” again, and profits are fixed.

README! It is believed that in the long term, a bullish mood prevails in the market. The explanation is simple — to be successful, the company must develop. When working for a long distance, its performance increases, the company is attractive to investors, which ensures an upward trend in the long term.

What Should an Investor Do When a Trend Changes From a Bull Market to a Bear Market?

The moment of trend change for an investor is the best time to make a successful deal and earn as much as possible. But how do you realize this opportunity?

1. Confirm that the trend is indeed reversing.
2. If there is an open position in the current trend, namely a long one in the bull market and a short one in the bear market, close it with profit-taking.
3. Enter a new position in the direction of the trend. Unfortunately, there is no reliable method that will display the exact moment of trend reversal and guarantee the price will be right. Various fundamental and technical analysis tools can be applied.