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Bulls & Bears in Forex Trading
Written by: PaxForex analytics dept - Monday, 24 February 2014 0 comments
Depending upon the domestic as well as international economic situations the market conditions keep fluctuating. It is possible to make money no matter what the conditions of the market are. In simple words a downward moving market is referred to as a bear market, while the upward moving markets are bull markets. A particular currency gaining value is called bullish, but if it is losing value it is called bearish.
In order to call the market bullish it usually requires the prices to have been gaining for a period of a few months. Bullish or bearish could be used to describe a single instrument, a whole sector or the whole market. Usually when the market is bullish it is better to buy and when the market is bearish it is better to sell. Since forex is traded in pairs when you combine a bearish currency with a bullish currency you can expect higher probability of return on your trade.
The term "bear market" is not only used in the forex market, but it is also used to describe similar conditions in the stock and bond markets. In most cases bear market conditions result in a widespread sentiment of pessimism among investors because falling prices often equate to decreased investment returns. Still, there are cases in which investors can capitalize on bear markets and make income despite the falling prices and pervading negative sentiments.
The term "bull market" is used to describe conditions in a market in which the prices are on the
rise or are expected to rise. Although the term bull market is often applied when describing stock market conditions, the term can also be used for other types of markets such as the bond, commodity, or foreign exchange market. In most cases a bull market is met by widespread optimism from investors because the rising prices can lead to increased returns.
There are plenty of different investment styles and strategies out there. You should remember that the forex trading strategy that you use should be based on your own analysis, market observations, and financial situation. Even though the bulls and bears are constantly at odds they can both make money with the changing cycles in the market. As a trader you should be skilled and experienced and have techniques and strategies to minimize risks in any conditions; bullish or bearish.