Difference Between Bullish & Bearish Markets
Financial markets attract traders for the lucrative opportunities they offer. For a trading enthusiast, it is very obvious to get indulged in the terminology used and understand the meaning of different terms used in trading. Even if you are someone who loves to read and understand trading without practicing or planning to do it in future, you must be aware of the popular terms. You must have heard about 'bullish' and 'bearish' markets. Have you ever wondered what they are and how they affect trading?
Bullish vs Bearish Market
TUnderstanding the difference between Bullish and Bearish markets is critical for people who want to practice free online trade UAE. It helps them trade in even the unfavorable market conditions and understand the effects they make. Both these terms are usually used by the professionals for indicating towards the nature of general price movements. Price movements are important for making trade decisions. They help traders understand the tendency of the market whether it is optimistic or pessimistic.
There are some terms that we need to understand first in order to understand 'bearish' and 'bullish' markets clearly. If the market is mentioned as 'uptre d', it shows that it's gaining value; and if it is 'downtrend', it means that it is losing value. These trends depict the market's behaviour, influence the profit margins and affect the traders' decision. You can refer to the top free online trading sites in UAE for more information.
A bull market is the market where you notice a rise or possibility of rise in prices. Price movements for such markets are positive in nature and these uptrends tend to last for long periods. However, they may last for a few days as well, depending on the surrounding conditions. A bull market is characterized by general optimism, strong uptrends, and investors' interest. Traders tend to be more interested and practice free online trade UAE with more confidence. Predictions are usually not accurate as the market behaviour largely depends on the traders' psychology.
You know a market is Bullish if the economy witnesses a rise or coming out of a past crisis. Supply and demand also make a difference. For instance, if the demand is high but supply is low, it will see a positive movement in prices as more investors will be interested in purchasing the assets.
In a bear market, everything is just opposite to the bull market. Prices will be constantly falling and there will be no possibility of a rise. The overall effect is pessimistic and traders prefer to sell assets rather than buying. The market witnesses back to back downtrends.
Like a bull market, the bear market also depends on traders' psychology. Here, everyone wants to play safe and hence they begin selling assets in order to avoid losses. This tendency creates a panic situation and prices keep falling until speculators come in to change the game. They begin buying assets on the low which gives rise to the market again. You can refer to the best online trading sites UAE for more information on this.