If you are a forex enthusiast, you may have heard about bull and bear forex market. They are 2 different types of market trends. Market trend is a way through which financial markets move in particular directions. Market trends are divided into secular, primary and secondary.
Forex trading is a very popular type of trading. It is an activity of buying and selling of currencies with the help of a broker. Traders make profit from the exchange rates of the currencies. It is important for you to know about bull bear forex markets if you want to be a smart trader.
Concepts of Bull and Bear Forex Markets:
The meanings of these financial terms are quite simple. These terms are used to denote attitudes of markets. We all know bears are slow-moving and bulls are energetic. Bulls and bear forex markets are reflections of a country’s economy. It happens in countries of strong economy with high employment rate.
When a financial market rises upward, it is bull market.
When a financial moves downward, it is bear market. In case of forex, bull and bear markets are reflection of a country’s economy. In countries with low economy, bear markets occur.
Characteristics of Bull and Bear Forex Markets:
- Economic Activity:
It is a fact that financial markets have a strong connection to the economies of the countries. Bear market reflects weak economy. On the other hand, bull market reflects the solid economy. In case of bull markets, the purchasing power gets increased. So, traders want to spend.
- Demand and Supply for Securities:
Bull market shows weak supply and strong demand for the securities. Many traders buy securities. But a few of them sell securities while, in bear market, the opposite happens. Many investors sell securities rather than buying them.
- Psychology of Traders:
The psychology of traders is dependent on the rise and fall of the markets. In bull market, the traders feel optimistic and the emotion is positive. But in bear market, the sentiment is negative. The traders start to move their money out of equities into fixed income securities.
How can You Deal with Them?
In bull market, you should take the benefit of buying rising prices. Buy securities early and then sell them when they reach their peak. The traders who believe the market will rise, generally they make profits.
In bear market, the prices continuously lose their value. So, the tendency of losses is greater. If you want to make profit, you should do safe investments.
Strategies of Trading in Bull Markets:
You need to keep some points in your mind at the time of trading in bull markets. Get an idea about them.
- You should always analyze the market at the time of trading. Get to know the history. Do a lot of research properly.
- Don’t get excited or emotional at the time investment because financial markets are volatile. They change rapidly and unexpectedly.
- Create your own strategies to be successful foreign exchange trader. Create strategies based on your financial condition, market observation and market analysis. It’s not wise to follow the strategies of others.
Use your knowledge of bull and bear forex market and get the desirable result.