The first few months of 2022 have been fully a roller coaster for traders. Concerns about increasing interest rates and inflation caused stocks to collapse in Jan, and the Ukraine-Russia war flickered another volatility wave for the stock space.
All this fright and unpredictability about what’s approaching has resulted in murmurs about the possibility of one more stock market crash, standing out as the only one since the beginning of the COVID-19 pandemic. So, where is the stock going? How can you determine what direction you will trade in?
Both bullish and bearish markets display numerous money-making opportunities. The path to successful trades is to rely on initiatives and opinions to help earn ore under various conditions. However, this demands concentration, steadiness, discipline, and the capability to maximize fright and avarice. But, what is bullish trend, a bearish trend, and which time is best to trade stocks? Worry no more! Keep reading this enlightening post to get the correct answers.
What’s a Bullish Trend?
A bullish trend refers to the increase in stock values and the overall market index over a certain period. An excellent technique to rely on and remember everything is to imagine the bulls’ horns representing stock values on the upward trend.
While this can be illustrated as a rise of a minimum of 20 percent over two months, it can significantly be anything positive shift in the stock space. You’ll probably encounter an infinitesimal dip during the bull markets, but those seem like radar blips, and the curve is mainly trending heavenwards.
When searching for an index’s long-drawn-out chart, you’ll realize that the chart is trending uphill up to a bear market level. Certainty and reliance are lofty during a bullish trend, and there’s a considerable need to purchase stocks. A bullish trend also stops after entering a bear market.
What’s a Bearish Trend?
Unlike a bullish trend, which doesn’t feature a clear description, a bearish trend features a specific description – if the market remains down twenty percent for more than two months. For instance, if you say you were in a bearish trending S&P 500, you mean you were twenty percent down from the peak-to-trough level.
You remain twenty percent after it cuts across twenty percent or goes extra percentages down. During the bearish trend, the economy can shrink. This issue may happen because individuals are storing money. Traders are afraid, they’re worried, and are more careful. And as a result, all these factors fuel the bearish trend.
Determining The Direction To Trade In
Take trends like the falling & rising ocean tides. All tides feature small-sized ripples & waves. Tides that have been going up for the past sixty minutes may feature ripples & waves that have been going down in the past few minutes. Therefore, this explains why a going up tide finally falls, and a going down tide goes up.
The timeline context is indispensable when identifying and discussing bearish and bullish trends whenever trading. Therefore, this highlights why investors complete several timeline analyses. Generally, trends featured on extended timeline charts developed over a long time. Also, it will take these trends more effort to shift course compared to trends featured in brief timeline charts. Moreover, you can trade trends as per your timezone, risk appetite, and price targets.
Conclusion
In bullish markets, traders should exploit increasing prices by purchasing stocks early enough in the trends and trading them after reaching their peak.
During bullish markets, all losses must be temporary/minor. All investors can optimistically trade more equity and enjoy higher returns probabilities.
However, the chances of loss are higher in bearish markets since prices are repeatedly deprived of value, and their ends are mostly not viewable. Even when you invest, hoping to generate upturns, you’ll probably take losses before a turnaround (any) happens. Therefore, you can find the most profitability in safer investments or short selling.
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