By Larry Wright
If you have dealt with any financial markets in the past may it be stocks or crypto, then you already know what a bull market is? However, to be able to become a good trader and grasp the complete knowledge of the assets that you are investing in, it is crucial to have your eyes fixated on market trends, where the market stands today, what is the prospect for a particular asset in the future gaining price momentum, is it bright or should you just quit your position and venture towards other assets?
These are a few things and questions that you should ask yourself repeatedly if you want to get better at investing and play the financial trading game properly. These market trends are susceptible to change, you might see the market flourishing one day, and the very next hour or day, it will be plummeting so hard that everyone across the board will be worried about their investment and what made the market behave in such a negative way?
There are 2 definitive ways you can tell the current market situation, whether it will be a bull market or a bearish market. A bull market or bullish trend refers to the speedy growth of certain assets within the market, the trust of the investors and traders intact across the board, and other variable movements that are being practiced and are active presently.
If the conditions are favorable and the market is working intensely, then even the most inexperienced trader or investor would do great; it means that even those amateurs will be able to turn a significant profit on whatever investment they are making. These are the smaller market cycles that you need to master if you want to succeed in a potential financial space.
Introduction to Bull Market
To fully comprehend the bull market trend, you must take into account the changes that are being ruled out within a financial market that is termed bullish by professionals. A bull market is a situation where prices of certain assets are rising, and they continue to become more favorable as the days pass. Now, this specific trend is not limited to one financial market. So, for example, you can’t say that if the stock market is bullish presently, then so would be the forex market or the commodities market, or the crypto market.
It doesn’t work like that; every market has its trends and cycles that investors and traders need to understand to move ahead to devise a proper trading strategy. The term bullish and bearish is relatively overused in any financial circle, and both refer to a different state of the market. If the market is bullish, then, of course, prices are rising, there is a chance for further betterment, and it is a great time to invest in the market.
On the other hand, if the market is termed as bearish, then it means that prices are falling, conditions are unfavorable. Therefore, people should be selling their positions while they still can or holding out on their investment so that this dark market period is over and they can once again see the bright light and promise that the bullish market represents.
It would help if you did not devise an uncertain definition or meaning from the term ‘bullish.’ It simply refers to the fact that prices are increasing right now; it doesn’t promise you a long-term opportunity for trading or that you should make a significant investment and wait it out until you have this out-of-the-world return on investment.
Things don’t work like that; markets are constantly changing, taking turns, moving through and from different cycles; that is why if the market is bullish, it doesn’t mean that it will stay in that position for very long. You need to be thinking, and you need to be making your own decisions, analyzing specific market trends and data to devise your strategy, and not having to fall into any trap that those financial gurus out there throw your way. While we are on the subject, it must also be mentioned that just because the market is bullish doesn’t mean there won’t be any price fluctuations.
As explained multiple times earlier, the market will shift, crack and make amends or even consolidate the price differences, even if in the most minute sense possible. So there won’t be a market crash per se during the bullish trends, but prices might fall, and assets might lose their value even when the general perception of the market is bullish.
A bull market might last a few months to even years, but this time frame is not permanent. There could be changes; the bull market might only come to the horizon for a few weeks and then disappear. This is just how those financial markets out there work. The volatility factor that is going to affect the performance of certain assets within the market is going to vary from crypto to crypto, stock to stock, and commodity to commodity.
That is why you must not feel tempted towards an asset just because it is showing excellent returns in the present. Similarly, you must not budge out to invest in a commodity or asset just because the present state is not feasible for you. You must wait it out, run proper analysis and take as much data into account as you can to sort out through these raving movements of financial markets.
Examples of Bull Market
If you want to consider how precisely a bullish trend works and just to what possible extent a market can remain bullish, you must take a few examples from the stock market. Therefore, it is the oldest financial market and the most opaque one. You might not find stacks of data and financial insights from the crypto market because it is pretty recent, and there is still a lot going around the crypto sector.
Therefore, the stock market is used as a proper tool and standard for driving an understanding of bullish or bearish trends. Please take into account, for example, the market indexes such as the NASDAQ 100 and many others; there are times when these indexes are rising around the clock, and there is no stopping them. But that doesn’t necessarily mean that there will be any fluctuations and price declines even for some of the most cherished market indexes, such as the NASDAQ 100. This is just a brief example of what a bull market might look like concerning the stock market. When it comes to the global economy, it will fluctuate more often and bounce to and from the bullish and bearish markets.
Therefore these economic cycles last more than the traditional markets; these could last years or even decades. Since the 2008 crash of the financial markets around the globe, a bullish market trend started, which ended when the coronavirus pandemic surfaced. Some analysts believe that it was the longest bull market in finance history. Now, if you want to confirm whether or not the statement and the data provided are accurate, there is no imaginable way to do so. This could be a true statement or something with a few holes in it but it is still pretty accurate.
Whereas the crypto market is concerned, the bearish and bullish trends are shorter, less consistent, and these tend to fade away more quickly than in the case of stocks, of course. Some say that Bitcoin has reached a point where the asset could develop a consistent bear market lasting many years.
But that is not true; it is speculation at the very least and nothing that is based on accurate or authentic results or data. On the other hand, Altcoins is performing under duress because these are not the primary crypto assets within the market and have to operate under the shadow of Bitcoin. The depreciation of price is very real for both Bitcoin and altcoins, and therefore you must know properly about the assets you want to invest in.
Significant Differences Between Bull and Bear Market
Both of these are gravely opposing terms, so you might not have much of an issue understanding the concept that both of these bring forward. A bull market is when prices are soaring, assets are increasing in value, and the market’s overall sentiment is favorable. A bear market happens when the prices are being slashed, assets are plummeting to their minimal value, and the overall idea of the market is pretty much negative.
When there is a bull market, traders and investors would try their best to stay in the game a bit longer. They want to reap the benefits that the market is bestowing them with, and therefore they opt for a longer market position, whereas in a bear market, the first instinct of any trader or investor would be to chip away their assets and liquidate them so they can still get some value out of these commodities while there is still time. They don’t want to hold their positions for long because who knows what kind of turns and twists the market will show tomorrow? It is better to ditch the whole thing and get out when there is still time.
In some cases, when a bear market is at its absolute high, people might try shorting the market because there is this general acceptability raving across the board that the prices might decline further, so why not make a few pennies by placing a bet against the market? When the market is bearish, this kind of strategy might pay off pretty neatly to the investors and traders in question, but at the same time, someone must be willing to accept the bet and consolidate whatever margin has been decided by those who have shorted the market.
Sometimes people would try to shorten the market not to earn a massive profit but to buy back the assets at a relatively lower rate. You must also consider the fees that will be inflicted on you because at the end of the day; you would be the one paying those fees when you sell something or buy something. If you want to go to a buying position, you might want to rethink the whole thing and have a general assessment of the funds that you currently have. You might have to pour a dedicated amount of fee to keep the position open, or otherwise, it will be closed, and everything that you have worked for would be for nothing.
Ways to Make Money in a Bull Market
The concept of a bull market is relatively simple. The prices are going up, that sentiment of the market is extremely positive and that is why you can take advantage of this auspicious opportunity. What you can do here is to invest in a certain cryptocurrency or asset whose price according to the market data points is going higher, and there is a decent chance that it will continue climbing. When you have invested some amount into that particular crypto or commodity, you need to hold it off.
You have bought something and now you hold on to it, this is a pretty neat thing that investors and traders do. Hopefully, the prices will go higher, and when you see a proportionate opportunity during which the prices have stopped climbing any further, that is the point where the bull market has approached its final setting. Now would be a great time to sell off your position and just get out.
You must make the trade within any financial market based on the recent data. Think of where the market is heading presently and moving because if you don’t, then you’re only going to regret it when it is just too late. Also, you must keep in mind that no trend or cycle is forever, there is a bearish cycle active within the market presently, and after a few weeks or months, there is going to be a bullish cycle.
Things interchange with each other, trends come and go, but the only thing which will remain consistent through all of this is your strategy and the understanding of the market where you actually see things for what they are and not cook up stuff just to ease your ego and swinging large bets on the volatility factor of these financial markets.
The only thing that is for sure is that markets are going to take a turn; a multi-year bullish market was delivered within a few weeks after the COVID-19 pandemic hit. It goes without saying that most of the investors and traders are going to approach with a bullish mentality in a bull market because why not prices are going up, and the overall sentiment across the board is positive, so why shouldn’t they go a little bullish? But some of them will actually be bearish even when a bull market is in full swing.
This doesn’t have anything to do with the position or sentiment of the market itself but the very strategy that these traders and investors are playing at period their strategy calls for it then yes, they are going to be a bit bearish during a full bullish market, or they would be shorting the market on a mere hunch that perhaps in the near future prices are going to be slain across the board and therefore shorting the market right now is the best strategy they could come up with.
You must not try to shorten the market on your own, especially if you are a beginner, because these are high-end strategies and are more suitable for traders with the required professional aptitude. If you are only a beginner, then the best thing that you can do here is to trade assets according to the present trend that is active within the market. Many investors are going to entangle themselves with all kinds of complications trying to play the long game or a more sophisticated play that is put out by the professional players; if you are not a professional, then don’t try to act or look like one.
Conclusion
You must conduct your own research to find common ground with the present market trends and the overall approach that you can use with a certain asset or dedicated time period within the bullish market. There is simply more to becoming a great trader; you don’t only have to balance out your strategy but must know what kind of risk you are undertaking and how you can mitigate them to the best of your knowledge. If you can do that, then we are going to become not only a great trader but an active investor that is shifting their strategy as the market trends change; whether the market is bullish or be rich, you would be able to find your way and make a living out of any financial market out there.