Day Trading Terminology: What do people mean when they talk about bears and bulls?
When it comes to day trading, bull markets and bear markets are two different trends that can be found within a market. These terms are used often, but should be reserved for candid conversation.
Bull Markets
Let’s begin with bull markets first. When someone refers to the market as a bull market, the market has steadily rising prices. These rising prices could be due to one of many contributing factors. These include general positive information that spreads among investors.
Bear Markets
On the other side of the spectrum from bull markets (mentioned above) are bear markets. These markets are trending down, sometimes in a violent way, like a bear swiping down. This is in contrast to bull markets, which trend upward like a bull pushing upward with its horns.
Sentiment in Day Trading
Some may hear the descriptions listed above and be reminded of certain economical bubbles from the past. However, bubble is the wrong term to use when describing these markets. Human beings are the only ones trading in the market (or human-created programs…).
This means that emotion will always play a part in decision-making.
One of the most important factors of day trading is understanding when market sentiment is weak or strong. This includes understanding when sentiment is just correcting for market swings early on.
An Analogy
Some prefer to think of day trading like a surfer thinks of waves. The tides will bring the waves, but the surfer is the one who has to catch them. This timing, technique and knowledge comes only after putting in the time to train.
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