For anyone looking to invest, whether as a beginner or an expert, it’s essential to determine if the market is a bull or a bear. If these two terms seem foreign to you, then you’ll want to continue reading.

A bull or bear market can work in the investors or trader’s favor if they know which is which, and it doesn’t matter what kind of trading you’re doing. By spending time researching your trading platform (take a look at some of these ECN forex options) and using the following tips below, you can determine whether you’re entering a bull or bear market and using it in your favor.

What is a Bull Market?

A bull market is when the prices are either currently rising or are expected to rise. Although you often use this term for the stock market, you can use this for anything traded, including forex trades.

You can look at a bull market as a way of optimism. The potential strength the bull market shows tends to last for several months or even years. There isn’t a specific way to measure a bull market. However, many investors agree on this definition: stock prices rise by 20 percent, usually after a drop of 20 percent and before a second 20 percent decline.

The most notable example of a bull market was from 2003 to 2007, right before the 2008 market crash.

What is a Bear Market?

On the other end of the scale is a bear market characterized by falling prices or the potential fall expectation. It is often lined up with a weakened economy. A bear market tends to be quite volatile with significant price swings and can last for months and even years. However, a bear market tends to happen quicker than a bull market.

There have been a few recent examples of a bear market. The most notable again being the financial crisis that starts in 2007 until 2009 (around 17 months long). Most recently, however, was March 11 to 12 of this year, right when Covid-19 rampaged the world.

How to Spot a Bull or a Bear Market

Once you know the difference between a bull or a bear market, it’s pretty easy to understand when you’re in one. However, are there signs of a bull or bear market to watch for?

In a bull market, investors tend to be confident in the stock market and are more inclined to hold their position longer. If you see investors getting comfortable and buying to hold, chances are you’re in one or entering a bull market.

On the other hand, if investors are worried about falling prices and not willing to take the risk, this can be a sign of a bear market approaching. When the market is volatile, investors may make moves they usually wouldn’t do and are less likely to hold on to an investment long-term.

If you’re unsure about a bull or bear market and when is a good time to invest, go with trusted trading platforms to help you out. Trading platforms like BDSwiss can help get you started (this review of BDSwiss can provide more information on the company). The purpose of a good trading platform is to help get you started and provide the proper resources so you can take advantage of a bull or a bear market at any time.

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