Before one starts investing in the share market, it is essential to know the important terminologies used. We have always heard stock market experts and news channels uttering bull and bear time and again. Many would have even seen the ferocious Bull statue in Bombay Stock Exchange (BSE) or the famous Charging Bull statue in New York. Have you ever thought of the significance of bull and bear in share market? Let us talk about the difference between bull and bear market in this article.
We know that share markets are volatile. i.e. they move up or down due to various political and economic factors. Bull and bear represent the market sentiment on the whole. Firstly, let us understand bull vs bear definition. In simple terms, bull is when markets are moving up and bear is when markets are moving down. Why these two animals werbull vs bear market
e chosen? A bull rises its head above when it is in attack mode whereas a bear moves its head downwards while it attacks. A bull market signifies optimism, positivity and reflects investors’ confidence in the market. People have a sentiment that prices would go up. The markets can be in bull phase when the economy is strong. The prices of all stocks move up in a bull market as people tend to become bullish on all stocks. As the bull market continues, it is sure to breed greediness in the stock market. Investors buy more shares as they are optimistic of their performances.
A bear market usually happens when unemployment increases and there is a slowdown in the economy. In this scenario, fear grips investors and investors start selling their stocks as they feel that the prices of stocks are poised to go down. The markets associate bear market with a recession. Prices of stocks keep going down in a bear market. Many see bear market as an opportunity to buy quality stocks at low prices and then sell them at higher prices when the market trend goes up. Investors panic when they witness a bear market but it is not needed. As the markets are cyclical, once they go down, they will rise up after some period of time.
There are several strategies followed by investors to cash in on the available opportunities in the share market. Bull spread and bear spread are the two option tactics used by traders. Bull spread is used by traders when they are bullish about a stock and try to get profit if the price of the stock rises as expected. Bear spread is used when the traders are bearish about a stock i.e. they expect the price of the stock to fall. Hope you have understood the differences of bull market vs bear market by reading this write up. As an investor you need not worry about when to enter the stock market whether during bull phase or bear phase. Anytime is the best time to begin your investment journey as markets cannot be timed. So don’t hesitate. Open your demat and trading account today!
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