Bear Market, Bull Market: Whats The Difference?

By October 25, 2022February 21st, 2024Forex Trading

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Any references to past performance and forecasts are not reliable indicators of future results. Axi makes no representation and assumes no liability regarding the accuracy and completeness of the content in this publication. There is no point in holding on to your bearish trading system when the market is running bullish and vice versa. Knowing that markets move up, down, and sideways is the clearest indication that traders need different trading systems (the right tools) for different market types. Each day we have several live streamers showing you the ropes, and talking the community though the action. What we really care about is helping you, and seeing you succeed as a trader.

More specifically, however, a bear market describes any stock index or individual stock that drops 20% or more from its recent highs. A bull market, on the other hand, typically rises 20% from recent bear market lows and reaches record benchmark highs. Long-term investors see market dips as a unique opportunity to get high-quality stocks at inexpensive prices, and can reduce their average cost basis by purchasing shares at lower prices.

  1. The FTSE All Share index recovered its 21% fall in 1975 in just 89 days but took over 1,500 days to rebound from the 49% fall in the global financial crisis (from 2007 to 2009).
  2. During your lifetime, you can expect to live through approximately 14 bear markets.
  3. The bulls try to push the market up while the bears short or push it back down.
  4. Rather, many experts recommend that they have an asset allocation that reflects their risk tolerance, their investing time horizon, and their long-term goals.
  5. It’s important to note, though, that even during bear markets, the stock market can see big gains.

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What is a bull market?

In SIP mode, irrespective of the market condition, an investment of INR 10,000 was made monthly and a number of units were purchased. Effectively, during the bearish periods, more units were bought and during bullish periods, the value grew. A bull and bear market phase occurs due to various economic factors. Historically, it is seen that both phases occur one after the other, in alternation. As investors sense a bear market coming on, this might be a good time to buy stocks, mutual funds and ETFs at a low price. Depending upon the depth and breadth of the bear market, there can certainly be some bargains to be had.

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We want the everyday person to get the kind of training in the stock market we would have wanted when we started out. We also offer real-time stock alerts for those that want to follow our options trades. You have the option to trade stocks instead of going the options trading route if you wish. An investor could potentially lose all or more of their initial investment. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading.

If the market is overbought, people will be taking their profits. However, it’s a correction and not the beginning of a bear market. Likewise, downturns will tend to reverse themselves no matter how rough the ride gets. Check out our online courses to learn how to trade a bull vs bear market. Typically, they are encouraged in a bullish market because the market sentiment is positive, and people are willing to invest their money.

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Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. There is no guarantee that types of charts in technical analysis any strategies discussed will be effective. It is extremely difficult to time either type of market and those who try to do so are often disappointed and may suffer losses in the value of their portfolio. A more balanced approach is often the best course of action for most investors.

In the Graph 1 given below, the factors that have led to the bull and bear phases in the last 22 years from January 2000 till May 2022 have been highlighted. At the beginning of the period from Jan 2000 till May 2003 and after that from September 2010 till September 2013, the markets did not show any trend. It is observed that bull phases last longer than bear phases, over a long-term trend. Over 22 years, there have been five instances of bullish trend as compared to three instances of bearish trends. Stock market movement cannot be predicted accurately, in the short-term, just like the event of seeing a head or tail when a coin is tossed.

Investors’ confidence starts climbing and the overall demand for stocks and similar assets go up. Businesses and companies usually get higher equity valuations, which usually means high levels of initial public offerings (IPOs). Unlike recessions that persist until the economy bounces back, a bear market only needs to recover by 20% to end. On average, a bear market lasts around 1.3 years as reported by data from the University of Idaho. Market timing is notoriously difficult, and you never know when the market is going to hit its bottom.

Yes, we work hard every day to teach day trading, swing trading, options futures, scalping, and all that fun trading stuff. But we also like to teach you what’s beneath the Foundation of the stock market. At Bullish Bears, we will help you take the first step to achieving your goal of financial freedom. Our online trading courses are provided as a tool to learn different ways to trade in different markets.

Factors That Cause a Bear Market?

Our live streams are a great way to learn in a real-world environment, without the pressure and noise of trying to do it all yourself or listening to “Talking Heads” on social media or tv. Bulls try to push prices up, and the bears try to push prices down. Stock market experts consider falls of 20% or more over two months or more to be a bear market. They usually use the S&P 500 as a guide to determine whether the overall market is bullish or bearish.

Value investors need to be patient and have a long-term horizon in mind to succeed in a bear market. Value investors look for stocks that are undervalued by the market and are typically willing to hold on to them for a long period of time, even when the market is in a downturn. By following trends, traders can take a more systematic approach, often with the help of technical analysis and trend following indicators like moving averages (MA). Bear traders can use short-selling to profit from the falling prices.

Juzer Gabajiwala has over 20 years in the field of investments and finance. He joined Ventura Securities Limited in 2005 as head of mutual fund products distribution and has been Director at the company since 2008. In the past, he has worked with Larsen and Toubro Limited, Telco Dealers Leasing and Finance Limited, IIT Capital Services Limited and Premchand Group.

There can be a danger that if sentiment turns, everyone could rush for the exits and try to sell. One of the most important factors to consider when gauging the market is that short movements only represent short-term trends or market corrections. “If your financial plan calls for a time horizon greater than a few years for the funds, and you aren’t carrying debt with a high rate of interest,” Bailey says. The longest bull market in history was over 131.4 months following the Great Recession.

Big market swings in either direction can feel overwhelming, especially when you see the effect they have on your money. But crafting and adhering to a clear long-term investment https://g-markets.net/ strategy could help you ride out whichever way the market’s going. It has been prepared without taking your objectives, financial situation, or needs into account.

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