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Explaining the Bull and Bear Markets

In the 21st century, many people have become a lot more interested in the investing world than ever before. Though purchasing stocks has been a practice dating back to over a century ago, at no point in time has it been more popular and easier to do than it is today.

This development, in part, can be attributed to the internet. Thanks to the world wide web, investors from all over the world are connected to different markets. More importantly, the internet hosts a huge number of online trading platforms, which are easily accessible and reliable. These websites offer a splendid tutorial and quite a secure and safe method to buy, sell and trade any stock you might be interested in purchasing.

Speaking of the stocks, what are the most popular forms of trading today? Is it just stock trading? Or are there other options for the people interested? In this following section, we will answer this question.

What Can You Trade?

The most popular option in the world of investment is stock trading. This is really simple. Stock trading entails purchasing stock of a given business, that you believe in. If that business is successful, the value of its stocks grow, and thus you begin to make money. At a certain point you can sell those stocks, and make a profit. However, it isn’t just stock trading that garners popularity at online trading platforms.

Forex exchange is another popular method of investment on trading platforms such as https://tradingplatforms.com/uk/.For those not in the know, Forex is a portmanteau of foreign exchange, and it refers to trading currency. Usually the currencies are linked, and the most popular currencies to trade are the Euro, United States Dollar, the British Pound Sterling, the Japanese Yen, and the Australian Dollar, among others.

And speaking of trading currency, the last market we are going to take a look at is cryptocurrency, which is making quite the splash. Many of the trading platforms will have options for crypto trading, so if you are an investor interested to explore this new market, definitely take a look.

However, before you start trading, there are some things you need to know. Namely, what is the difference between a Bull and a Bear market? In the following section of the article we will explain what these terms mean, and give you a better understanding of trading in general.

The Bear Market

Let’s start with the bad news. A bear market refers to a market whose stocks have seen a 20% dive in value, after it has been consistently in the black. Often times, the phrase is used more colloquially to refer to an option which sees a spike. However, for the most part, stock traders will not refer to a market as a bear market, unless it has seen at least a 20% fall.

So, where does the phrase come from? Well, the answer to that is a bit difficult, however, a popular theory suggests that the name is derived from the way a bear kills its prey. The bear will stand on its hind legs and raise its paws, before swiftly bringing them down to deliver the finishing blow. Much the same way as a bear market sees a steady rise before it quickly comes down. Another theory claims that the name simply comes from the fact that bears hibernate, and so the market is retreating.

When it comes to a bear market, there are two types of investors. The kind that sell off their shares in fear of hemorrhaging money. And the kind that purchase stocks from a bear market while they are cheap, knowing that eventually the value will stabilize, and see a surge in popularity again. In either case, there is no right answer. As sometimes a company could go bankrupt, leaving you no way to reclaim the money lost, while other times, the company is simply experiencing some trouble, and soon stabilizes. When deciding what to do during a bear market, you will simply need to do some research, and ultimately trust your business acumen.

The Bull Market

Now for a more positive note, a bull market is the opposite of a bear market. Originally, the term “bullish” was used to refer to a person making a risky purchase, with the hope that the value will rise. Today, however, the term refers to a market that, while previously having experienced difficulties, is currently seeing, at least a 20% surge in value.

The term, it is believed, comes from the phrase “charging bull”, which serves to describe the phenomenon quite well. As, similar to a bull, the market is “charging” in an upward trajectory. The bull has come to be identified with positive connotations regarding the stock market in general, thanks to the Charging Bull statue that symbolizes a rising market, sculpted by Arturo di Modica.