What is a bull market? — A beginners guide
Every financial market moves through trends; it is just the nature of things. According to Wikipedia, A market trend is a perceived tendency of financial markets to move in a particular direction over time. In other words, a market trend is a direction an asset or a financial market is heading. Predicting these trends helps analysts and researchers to be able to create an informed opinion on what assets would rise or fall in the future.
Bull markets are typically perceived as the most favorable trading conditions. Even beginners in the market could stand a reasonable chance of making reasonable returns.
So, what is a bull market, why is it significant, and how do you tell you’re in one? We’ll get into that with this article.
What is a bull market?
A bull market, also called a bull run, is a state whereby the prices of assets in a financial market are rising. Initially, this term was primarily used to refer to the stock market. However, it is now used for forex, real estate, cryptocurrencies, etc. It could also refer to specific assets like Bitcoin, Ether, etc.
It is imperative to understand that just because it is a bull market doesn’t mean the price of assets doesn’t fluctuate. A bull run doesn’t necessarily imply that there will be a long period of optimum trading opportunities, it just means prices are rising and are expected to continue to do so.
Characteristics of a Bull market
There isn’t any indicator that shows the start and end of a bull market. Most of the time, analysts look for specific data and make a conclusive guess of whether or not they are in a bull market. These data could be viewed as signals because they help create a definitive and educated guess of the nature of the market. For beginners, here are two indicators to look out for.
The economy: If the economy is healthy, you might be entering a bull run. Positive economic growth isn’t always required, but it often occurs side by side with a bull run. This means there will be lower unemployment, a strong GDP, and significant investments in new businesses, technologies, and even people.
The investors: Another indicator is the behaviour of investors in the market. Investors would see opportunities and buy more stocks in hopes of sustained price increases that would bring them positive returns. This could lead to price jumps which would be reflected across the major markets, i.e. S&P 500, Nasdaq composite etc.
Bull market examples
There are several significant bull markets in history. According to Rocket Hq, a more recent example lasted around 11 years but ended around the start of the coronavirus pandemic. According to some accounts, that might have been the longest bull market in history.
The bull market is the most beneficial type of market to invest in for potential high gains. Although their start and end are difficult to predict, it is not impossible.