Bulls and bears on the stock market

2.10.2022
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быки и медведи картинки

Anyone who is even remotely interested in financial analytics has an idea that the bear and bull are not just animals, as the main bidders are called on the stock exchange.

The bull on the stock exchange is waiting for a price increase. He enters into an acquisition transaction at the current exchange rate, and accordingly, an increase in the value of shares will be in his favor. In other words, the main goal of bulls is to buy cheaper, sell more expensive, and make money on this.

Bears in the stock market, on the contrary, are waiting for a decrease in the value of assets, they enter into a contract to sell shares that the seller does not own at the time of the transaction. They benefit from lower prices to buy cheaper stocks. Their main goal is to push quotes down.

Who are the bears and bulls on the stock exchange? What are the differences?

A newcomer to the exchange needs to understand that:

  • bull market is waiting for higher prices;
  • the bear market is waiting for prices to fall.

When an economy is in a bull market, that is, rising prices, it is considered stable. The main difference between this situation is a small number of unemployed people with a good level of income.

Bears start to act actively in a weak economy, for example, in the event of a massive outflow of labor.

Oversaturation of the bear market in some situations causes panic, leads to a collapse in prices, total sale of currency, provoked artificially.

The bull market may grow due to increased investor interest. But this is not for long, over time, this soap bubble will still burst, which will lead to large losses.

Bear and bull on the stock exchange. History of names appearing

bull and bear on wall street

It is generally believed that the terms were invented by a satirist and comedian from England, who in the XVIII century wrote short stories, one of the heroes was John Bull. The surname means “bull” in translation. Bull was a typical Englishman, but he had a bull’s head. He regularly argued with another character, a bear. In one of the stories, a fight broke out between them right in the exchange hall. After that, they were often mentioned in conversations about traders with similar behavior.

However, there is a completely different theory of the origin of these names. The terms come from the fact that each of these animals attacks its opponent. The bull in the process of attacking raises its horns up, and the bear, on the contrary, goes down. These actions were associated with market situations: if it goes up, it is considered “bullish”, only the bulls in this case win. And when the market starts to decline, it is usually called “bearish”.

How do bulls earn money on the stock exchange?

Bulls buy various securities, expecting their value to increase. Usually, these market participants wait for the peak price of the purchased shares and immediately sell them. Profit is derived from the difference between the purchase price of securities and their sale price.

How do bears earn money in the securities market?

It is not profitable for bears if the stock price rises. That is why they try to buy shares that are not likely to go up in price. Among the main parameters that attract a bear are::

  • poor company reporting;
  • recent resignation of the CEO;
  • industrial accidents or emergencies, etc.

They choose all the criteria that can negatively affect the company’s share price.

Bears are players on the stock exchange who earn according to the following scheme. The bear lends a certain number of shares of the company and immediately sells them at a low price, receiving a certain profit. Further, according to the forecasts of the bear, shares will lose in price on the stock exchange.

During the session, he buys the previously sold shares back, but at a lower price than he sold them. After buying back all the shares, he will return them to the owner and earn on the difference.

Not everyone can buy shares at the lowest possible price and sell them at the peak. Therefore, all participants of the stock exchange, bulls and bears, need to adapt to the situation and mood on the stock exchange. Each trader decides who to be in the market, based on the specific situation.

Therefore, a bull can turn into a bear and vice versa, this is a fairly popular practice.

However, it is necessary to understand that bulls and bears in the securities market should take a professional approach to the process of buying and selling assets and cryptocurrencies. It doesn’t matter whether the trader is a bear or a bull, he can earn money if he carefully studies the strategies. However, not every trader can become a bull or bear, as these strategies require a certain mindset and character.

Bulls in the stock market should be as patient as possible to wait for prices to rise. Bears are considered more risky, as this strategy is characterized by greater risks that stocks may no longer be considered profitable.

The stock market. Bulls and bears, as well as other exchange participants

monument to the bull and bear

After the rise in popularity of cryptocurrencies, most traders began to be called “hares”. Such market participants carry out a large number of transactions within a short time. They make a profit on small fluctuations in the exchange rate. Their profits are usually small, but if they continue to develop in the market, they can move to a more professional category of traders.

The most dangerous and at the same time the most successful on the stock exchange are wolves. This name is given to speculators who earn money only on fluctuations in the exchange rate. They are always ready to buy large amounts of assets and spend a lot of money to artificially inflate the price of shares. After that, they will re-implement them.

Pigs are called professional exchange participants who can invest their finances in cryptocurrency without thinking and lose them. There are rules in the market that everyone must follow in order not to lose their money. However, some market participants deliberately or accidentally ignore these rules. The pig will hold on to its shares until the end, even after it becomes clear to everyone that the value of assets is falling.

The most careful and attentive traders in the market are sheep. They are very hard to part with their money, but if they invest, then only in promising lots. As a rule, most often they will be in profit, although it will not be too large.

Traders who constantly fail in the market by making failed trades are called moose traders.

Traders who have no experience are lemmings, they are just starting their way on the stock exchange. They can accurately copy the successful strategies of professionals.

Very often, market participants do not even realize that they belong to one or another category of traders. Most beginners come up with certain strategies on their own. If you work on the exchange professionally and carefully, intelligently solving all issues, you can succeed in any strategy.

To sum up, bulls and bears in the stock market act as certain opposing sides. However, the exchange does not guarantee stability, so the situation can constantly change.

It doesn’t make sense to stick to one strategy all the time.You need to be able to navigate market situations, adapt to any conditions, and choose the most profitable strategic solutions.

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