Bull Market – Taking the Bull by the Horns

Even if you’re only peripherally aware of the stock market and trading, you’ve probably hear the terms bear market or bull market before.  These two descriptions are usually applied to the stock market as a whole, but their use can also be focused on other traded commodities, bonds, currency, or even real estate.  Knowing the basics behind just what a bull market or bear market is will help you not only to understand what investors are talking about when they mention them, but also how you can take advantage of various trends in the market, letting you make smart trading choices accordingly.

A bull market or bear market is basically named by the way that the two animals attack.  A bear swipes its paws downward, while a bull thrusts its horns upward.  In other words, a bear market is one that is trending downwards while a bull market is one that is trending upwards.  These terms can be secular, primary, or secondary.  Secular is used for long term durations, primary for medium terms, and secondary for short.  Knowing the market trends and the forecast can obviously help you choose when is the right time to buy or sell stocks, commodities and other tradable assets.

Taking advantage of an emerging bull market is in any investor’s best interests.  At the start of one, prices on stocks will likely be lower than average.  Buying when you feel that prices are at their lowest just as an upward moving market is starting could lead to big gains.  Of course, spotting a bull market early takes diligence and skill, so you’ll need to learn the various signs that suggest it’s on the way or already occurring.  In many cases, stocks can rise by tens of thousands of points over a period of just a few years.

On the flip side of a bull market is the bear market, and the main issue in these cases is that the actual downward trend sends traders into a panic which only further contributes to the decline. The dot-com bubble burst and the Wall Street Crash are two good examples of this.  Markets are often influenced by a number of factors, one of the main ones of which is investor confidence or fear.  If you’re lucky enough to spot a bull market as it occurs you stand the chance of making serious profit within a short time, so be sure you learn how to take that bull by the horns.

About Richard Wilson