Investors often conform to one of two views when assessing the market, its future, and specifics of given securities. The bull and the bear, as these are called, are animal stock trading terms that express the main views of the optimistic and the pessimistic trader. Following is some information on these stock market terms.
The Bull and the Bear
The bull is the trader who is optimistic. He or she believes that the market, or its components are likely to rise. The bull can see this happening to an entire market, or just a part of it, or even a particular security. For instance, one may have a bullish view of a security in thinking that in the time to come, it will increase in value, and that bullish investor will trade accordingly to profit.
The bear is the pessimistic trader. He or she believes that the market or some part of it will decline. For instance, a trader with a bearish view of NASDAQ will prepare for an overall decrease in value, and he or she will trade accordingly (bearishly) to save, by pulling out of it.
Stock Market Bullish and Bearish Trading
Bullish trading is investing that anticipates an increase in value of the entities concerned. For example, a bull will buy stocks that he or she expects to rise in days to come, so that later, when they have gained enough or begin to even out, their shares may be sold for profit.
Bearish trading is investing that anticipates loss. If a bear investor has a number of shares of a given stock, likely he or she will unload some or all of them, as the bear expects the value to decline in the days to come, which would result in loss.
Bull Market and Bear Market in Stock Trading
When investors who have certain beliefs about the future of a market or its components are right, their beliefs can actually influence the market, and cause it to stay on course.
A bull market is a rising market in which the values of securities are increasing, and investors believe that the trend will continue. At times, this can even lead to its continuing the upward trend. People are optimistic, and they are therefore buying into securities that are rising, actually influencing values to keep the (bullish) trend.
A bear market is a market in which securities are decreasing in value, causing pessimism. This in turn has stock traders pulling out, which helps the market to maintain this declining (bearish) trend.
Individual investors will buy and sell according to their predictions. Traders (bulls) who anticipate bullish movements are likely to buy or hold onto stocks to sell later for profit, and those (bears) who anticipate bearish movements are likely to unload shares, to save and prevent loss. These investors themselves can, when abundant enough, actually determine the course of the market, and prove themselves correct.
By clicking on the click and signing up for an account, I earn a commission, no extra on your part 🙂