Bear markets are closely linked with economic recessions and depressions. Recessions are formally declared when GDP decreases for two consecutive quarters, while depressions occur when GDP decreases by 10% or more and the downturn lasts for at least two years. Examine https://www.bigshotrading.info/blog/5-best-forex-trading-platforms-to-trade-on/ some of the best technical indicators utilised by traders worldwide. Take advantage of these techniques when conducting technical analysis of the markets. And as you no doubt know already, even in an upward trend some markets tend to pull back and then retrace.

• A declining unemployment rate is consistent with a bull market, while a rising unemployment rate occurs during bear markets.
• The reverse of a bear market is a bull market, characterized by gains of 20% or more.
• Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy.
• Conversely, in a bearish market, the market sentiment is quite pessimistic and reflected by investors taking a lot of short positions.

The U.S. stock market was in a bullish mode after recovering from the 2008 financial crisis until pandemic-related uncertainty caused a market crash in 2020. The chart below shows that, aside from minor market corrections, a bull market persisted for more than a decade. The longest bull market lasted from 2009 to 2020 and resulted in stock growth of more than 400%.

How to identify a bull market?

Precisely because cyclicality derives from people’s expectations and behaviour, psychology and market sentiment are very important in economics and finance. This is the key that will help us understand the meaning and difference between bull and bear markets. Like bull markets, there’s no exact way to determine if you’re in a bear market. Lower lows and lower highs are usually common and a sign of bears taking over bulls, but the most important thing is the overall feeling of pessimism that arises in investor sentiment.

And remember, there is always a good degree of risk when investing in a volatile market. If you’re in it for the long haul (like an index fund or retirement account), it’s best to avoid panic selling. Chances are, as the history of the stock market has proved, the economy will recover and your holdings will begin to appreciate again. Bull and Bear Market: Definition & Difference Bear stock markets are trickier, as it’s hard to say which companies may survive and bounce back with new profits and which ones go under — and take your capital with them. However, if you’re investing in the short term, it’s a good idea to research which companies are likely to survive and only consider investing in those.

TRADING ROOMS AND LIVE STOCK TRAINING

First, remember that stock prices can go up and down, and no one can predict the future movements of the market. Second, it’s necessary to diversify your portfolio by investing in a variety of different assets, such as stocks, bonds, and cash. The perception and sentiments of investors in a bear market are negative. As a result, investors start moving their money into fixed-income securities as they wait for the stock market to move in a positive direction.

Thus, it isn’t unusual for a bear market to experience days or months of upward momentum and turn downward again. Whether it’s better to buy stocks in a bull vs. bear market isn’t a simple question; every market is unique, as are each individual’s circumstances. Investing in any kind of market comes with risk, including the risk that you could lose money, so it’s important to understand best practices for investing in both bull and bear market phases.