What Are Bearish and Bullish Markets in Forex

Whatever field you work in, there is terminology specific to that line. The world of finance has its own language as well. If you want to succeed in Forex trading, you need to brush up on the terminology. Forex terminology is identical to that of any of the other financial markets. For example, shares or investing in commodities. So once you have mastered the terms in one aspect, you have will know the terminology in all markets.  

When you are involved with any financial trading, you need to continue to learn from those who are more experienced than you.

What are Bulls and Bears?

The strangest names for financial concepts have to be bulls and bears. These names came from the way that these animals attack, and some imaginative person must have thought: “Oh, that’s the way the market behaves in a bullish and bearish way.”

The origins of the terms are obscure but are sometimes attributed to a painting by William Holbrook Beard called “The bulls and the bears in the market.” It is a satirical painting depicting bulls and bears stampeding out of the stock exchange while attacking one another. Some believe the painting depicts the stock market crash of 1873. 

Art critics have interpreted the painting to depict traders, with bears representing the careful investors, and the bulls representing investors who take a risk. 

Others attribute the names to have a British origin where the bull is the optimistic trader, and the bear is the pessimistic trader. 

Another attribution points to the bull and and bear-baiting for amusement, as mentioned in a few of Shakespeare’s plays.

History of the terminology bullish and bearish

In the 18th century, traders would often sell bear furs before they had them in stock. The bearskin trader speculated on a stock that he didn’t have, hoping he could get one before he had to hand it over. Soon the stock market adopted the phrase bearskin trader to categorize the trader who speculated on a possible downturn. This was shortened to bear trader and then to bearish.

There are many theories on how the term bearish and bullish came into being. Another theory follows in the next section.

What is the difference between bullish and bearish in Forex?

When a bull attacks, he runs at the target with lowered head. When he reaches the target he flings his head (and horns) up to gore or toss his prey. Because this is an upward movement a bullish market is a positive one. Prices are moving up.

When a bear attacks his prey, he heaves his paw down from his shoulder. This downward movement can be translated into a negative financial trend. Prices are moving down. 

A bullish market trends upwards. People become optimistic about their investments. They want to increase their investments. They are in a frame of mind that will accept the dips in a market. Forex currencies like the Australian dollar, the New Zealand dollar, and the Canadian dollar are seen as beneficial investments. The exotic currency pairs will also benefit from a bullish market. 

Bullish and Bearish Market Behavior

A bearish market trends downwards. A nervous trader will pull out of their investment. This is particularly true with Forex pairs that include the United States dollar, The Japanese yen, and the Swiss franc. 

When you trade in Forex, you deal with currency pairs. One of the currencies may be underachieving, and the other may be bullish. Successful Forex trading relies on following currency trends and switching the currency pair as one of the pair swings from bullish to bearish and back again.

The difference between bullish and bearish markets

The terms bull and bear can be applied to the Forex market and investors. In the market, a bullish market is a market in an upward trend. A bearish market is a market in a downward trend. When talking about investors, a bullish investor is an optimistic investor, and a bearish investor is a pessimistic investor. A bullish investor banks on the market rising, and the bearish investor expects the market to decline. 

A bullish investor banks on a pair’s exchange rate to improve. He is worried that if he takes too long to decide, he will lose an opportunity to make some money. A bearish investor is the opposite. He worries that if the pairs lose value he will lose his money. 

Is Bearish in forex buy or sell?

What happens in a bearish market depends on what kind of trader is involved. Some traders want to sell the Forex pairs that are not performing well. Other traders are willing to buy those pairs hoping that they will go up. They are following the maxim Buy low, Sell high. Bearish traders sometimes sell as the price is going up. When the price decreases, they will buy in again. 

There are two currencies, the so-called safe-haven currencies, the United States dollar and the Japanese Yen that do well in a bearish market. People will sell their Forex pairs that have bearish tendencies and will clamor to buy the USDJPY.

Bearish terminology

A bearish market is established when the value of the Forex pair drops more than 20% below the last high. This drop must be a sustained drop. A drop in value that lasts for a couple of days does not establish a bearish market. The longest time that a bear market existed in America was 61 months over a section of the World War II period. Traders will start to get rid of their investments. The more traders who clamor to sell will sink the pair further into a downward slope. The bearish market becomes more established. Traders become more pessimistic. As the general pessimism grows, it gets harder to sell the bearish Forex pairs. 

The term bearish can be used about general market trends, a particular commodity or Forex pair trend, a person, or even a company. If the whole market is bearish, it could be heading to a crash which would be catastrophic. Stock market crashes lead to a country, or to a worldwide, depression. Some Forex pairs enter the bearish market when calamitous news or climatic events from the countries occur.

A pessimistic trader is a bearish trader. They are always expecting the worse to happen. They feel that their Forex pair will go down in value. Fortunately, most traders are optimistic. It is an occupation that attracts optimistic people.

A company that is losing money and customers will also lose on the stock market. It will be labeled a bearish company.

Who uses the bearish market?

A Bearish market is a good market for those who want a cheap investment hoping that it will start to rise soon. The sellers of the bearish pairs would sell before the price lowered to their purchase price. They want to still make a profit on the deal. The new buyers have established their entrance point. They will stay with the pair through a dip as long as their strategy sees them gaining in the end, as the Forex pair will hopefully pull up within their strategy period.

Is Bullish in forex good or bad?

A bullish market is a confident market. The prices are moving up. The traders are optimistic about their investments, accepting the risks that are part of Forex pair investments. Currencies in the minor Forex pairs become a popular investment. The safe-haven currencies become less popular as people gain confidence in their risk-taking.

Traders entering a bullish market for their chosen Forex pair do so,hoping that the market will continue to rise for the period of their investment. They will try to anticipate the peak when they can sell to make a good profit. They will use tools like using candlestick charts and moving averages.

Nowadays when we refer to a market being bullish it means that the market can be viewed optimistically. It didn’t always mean that. Historically it meant that traders were going to speculate on the market hoping that it would improve. 

Bullish in Forex pairs means that one of the pair is in a bullish position, so you will need to focus your financial output on that currency. 

There are a few different types of a bullish market:

Bullish normal means that the trend will continue, and traders can safely leave their commitment for the long term as the trade becomes more bullish. 

Bullish volatile means that the trader needs to watch the trade as things could change rapidly. The bullish trend could revert to a bearish trend.

If the market is moving sideways then nothing much is happening with your Forex pair. You are either going to hang on to see what happens or you will get bored and sell so that you can invest in a more exciting pair. 

To answer the question in the heading- in my opinion, it is good, your trade is making you a profit.

What does bullish mean in forex?

No matter what commodity, stock, or Forex pair you want to invest in, you need to study trends. In Forex you are trading in currency pairs. One of the pair will be performing in a bullish trend as the other’s value is decreasing – a bearish trend.

If you are trading Forex, then it is a good idea to learn as much about charting as you can. Charting gives a visual trend of what is happening and you can easily distinguish a bullish (or a bearish) tendency. 

Your broker will also be a source for advice in a bearish trend. His experience will enable him to use many tools efficiently to give you the best advice. He will always advocate the adage “Buy low, Sell high”. 

When you have Forex pairs that are in a bullish trend, it is best to hang on to them and maybe invest more money in them. If you haven’t invested in the bullish pair, consider buying into them, selling other pairs if necessary to finance your option. 

Conclusion

Investing in Forex pairs satisfies both the bullish and bearish markets. When one currency is down, the other goes up. The bullish trader hates the idea that he may miss out on a good deal. The Bearish trader worries about losing money on his investment. 

A bull market tends to prosperity for themselves and their country. The traders are optimistic. They foresee an increase in job opportunities and the general economy. A bear market is pessimistic and sees a decrease in job opportunities and the general economy. 

The switch between a bearish and a bullish market is indicated by the trend of the Forex pair. A bearish market tends lower, and a bullish market trends higher. 

Bullish and bearish markets help Forex traders make investment choices according to the trends in their chosen currency. 

Trading Forex requires discipline, planning, studying, and financial input. It takes money to make money.

You need to find a strategy that works for you. Be disciplined. Be consistent. Keep a journal. Stick to a trading plan. Continually study the market and trading techniques. Trading has become more specific as more tools are available.

Trading Forex is not an overnight thing. It is hard work, and if you want to succeed, you have to stick with the ups and the downs. It’s a long road to travel from being a beginner trader to becoming a profitable trader. Everyone loses at some stage. Maybe your losses are discouraging, and you give up, never knowing if you would have been successful if you had stuck it out. Failure is a useful learning tool, particularly if you come out winning at the very end. It is important not to dwell on failure but rather to celebrate successes.

The term success breeds success can be applied to Forex trading. The more people who invest in a forex pair, the more bullish it will become. The opposite is also true. The more people sell off their Forex pairs, the more bearish the market will become. Traders drive the success or failure of a forex pair. 

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