What is a bull market?

Perhaps when reading economic news feeds, you have encountered such terms as - a bull or bear market. You might have been really confused thinking about what financial markets and these two animals have in common. However, this is slang built on analogies of the behavior of bulls and bears and market movements. In this article, we are going to discuss in detail what this slang really means.

Definition of a bull market

Let's go back to the analogy. Bulls thrust their horns up into the air before the attack. They hook their opponents on the horns and throw them up. Market bulls do likewise. They enter the market and push the price up. When the price starts moving up on stock exchanges, it means that a bull market (trend) unfolds.

In other words, the bull market is a period of upbeat market sentiment on stock exchanges, accompanied by rising prices, buoyant demand, long positions, and a noticeable decrease in the number of sellers.

In this case, traders who open positions at a price increase are called bulls, while steady growth in the market signals a bullish trend. A bull market can last for several months or a couple of years. However, you can never say for sure at what point the trend will change.

How to make a profit in a bull market?

Savvy speculators are well aware that the best way to reap a profit in a bull market is to sell assets at a higher price. In order to multiply returns, it is important to stick to three essential rules:

• Open long positions at the very start of a bullish trend.
• Constantly watch market situations and related news.
• Close your trades before prices start to fall.

Peculiarities of a bull market

Bull markets have certain features that help traders identify them.

Here are some of them:

• The start of a bullish trend always indicates optimism about the current situation in the global economy and expectations of persistent market growth in the future.
• The bullish trend usually takes place amid a low unemployment rate and a stable labor market. Enterprises make more investments. They expand, increase the range of products as well as raise wages.
• During a bullish trend, risk appetite significantly increases which leads to a surge in long positions.
• The law of supply and demand prevails in the market, which instantly pushes prices up.
• Oftentimes, a bullish trend is confirmed later than it actually starts. It is quite difficult to determine its beginning until prices start decreasing again.