Lesson: Financial Spread Betting Basics: The Bull And The Bear
When it comes to financial trading it’s good to know your spread betting basics. Despite the fact that spread bets often work different from normal trades (i.e. you do not actually buy the stock), you are just as prone to market pressures and many of the same things regular investors are. So let’s talk a little more about these basics. Today we’re going to talk about market trends.
What are Bull and Bear Markets
The bull and the bear are used to describe market trends. A bull market describes an upward trend and a bear market describes a downward trend. The origin of these terms is not clear but it is likely that it dates back to the long-since popular blood sport of bull-and-bear fighting.
The point is that these two words are used by the investors and media to convey not just movement but a whole whack of investor emotions and psychology. Let’s take a look shall we?
Spread Betting Basics: Bull Market
A bull market is viewed as a good thing. It’s associated with growing investor confidence and the perception that the markets will grow in value in the future (prices will go up).
A “bullish” trend is when a stock, index, exchange rate, or commodity shows an upward trend. Investors generally favour bull markets because prices keep going up. They feel confident in this time period and feel as though their investments value is going to increase. We’ll talk about the accuracy of these feelings in just a second.
Spread Betting Basics: Bear Market
In contrast, a bear market is viewed poorly. It’s associated with investor pessimism and fear because the market keeps going down. The lack of confidence tends to make investors hold on to their cash instead, choose alternative investment mechanisms, or accept what they often feel is massive levels of risk.
Before you start check the best spread betting platforms.
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