Secular bull market definitionDwain Ross 10 / December / 20 Visitors: 160
Trading terminology is very important because any tool, indicator, strategy requires considerate adjustment of parameters and you need to speak the language of trading to do that. In order to know what is going on in the market and accurately understand whether bears or bulls dominate the market, what changes are to be expected, it is necessary to understand all the basic concepts and terms. Then you can determine the direction of the trend, take into account the volumes and number of orders that are opened in this direction. As a trader, you might find it quite difficult to determine the current market condition in the process of working in the financial market since you do not see other participants and trade only using the trading terminal.
The definition of a bull market is a financial market of certain securities where prices are going up or anticipated to grow in the near future. The term is usually used in relation to the stock market but is applicable to any tradable assets like bonds or currencies. They are followed with enthusiasm, investors' confidence and anticipation that favorable results will carry on. But it is very hard to constantly foresee when the market trend will change. Part of the complication lies in the fact that emotional factors and investors' expectations can play a big role in market development. During the bull market, the base currencies acquire significant value while the quote currencies lose value. For instance, if the currency pair EUR/USD went up, it means that the euro will rise and the US dollar will fall.
There are three generally accepted trend types: short-term, medium-term and long-term. The secular or longest trend consists of several primary trends and can last from 10 to 25 years. At the other end of the spectrum, there is intraday data showing us trends lasting only 10-15 minutes. It is necessary to distinguish between these because you need to treat them differently in order to make the right trading decisions. Between the years 1978 and 1980, there were four stock market crashes in the US. Despite the apparent unfortunate situations, such cases of stock crashes gave traders a unique opportunity to gain fortunes because in a situation of systemic stability (or even an uptrend), collapses almost instantly recovers and continues its interrupted growth. A vivid example is Black Monday on October 19, 1987, when on the outside it has been crushingly bad. However, in the context of the secular uptrend, it gave a tremendous opportunity to enter the market. Therefore, knowing secular bull market definition and pattern of behavior can give an important insight.
The bear market falls under those market conditions when prices for stocks or currency pairs decline and the market situation is under the influence of declining trends. Traders are beginning to eagerly sell the stocks or currency, which only strengthens the bear market conditions. At the same time, there is no need to confuse the bear market with correction of market conditions, which happens as a result of a short-term trend lasting no more than two months. While such corrections are an excellent opportunity for traders to find entry points to the market, the bear market rarely provides good points to enter the exchange as it is very difficult to understand when it reaches its bottom limit.
Each trader uses a different approach in order to determine in the market conditions. For instance, the bear or bull market may be identified using a number of popular indicators, the most common of which are the following two methods: curves of moving averages and trend lines. Curves of moving averages for 200 days will change their direction much more slowly than the curve with a shorter analytical period; it helps to analyze the general direction of the trend in the market. In other words, if the moving average curve moves from the highest point on the left to the lowest point on the right, then the market is in a declining trend or a bear market, otherwise, it is a bull market.
Another common way is the analysis of weekly trend lines. The zones of support and resistance will move diagonally across the chart reflecting in which direction the market is moving. The higher the timeframe chart is, the higher the reliability of the results at the end of this process. One of the most reliable trend lines are those that are displayed on the weekly charts because they cover a large amount of information regarding trades in which we see the trend of price movement. If the price tends to have a constant decline, you can tell it is a bear market.
A bull market is far easier for a trader than a bear market. Professionals often try to defend the falling market. Obviously, bear markets sometimes last for years and having a passive position for such a long time is difficult and rather unprofitable. Traders count on the price decline and ultimately lose money. The falling market is dangerous due to the fact that it does not only fall but makes big bounces up. Gaps in prices in this situation are also more frequent and dangerous than in a growing market, especially those ones which are at the very end when traders lose their focus. However, at this point the bear markets are gaining strength and gradually change into the bull market. Not all traders can quickly rearrange and identify the new forming trend because someone will definitely perceive it as a bounce. Not to mention, they cannot be distinguished even by professionals who have been trading for many years.