Stock markets are neither static nor linear. If you observe the pattern of any market, you will see a cyclical trend. Equity markets globally go through cycles of rise and fall. Therefore, to describe the boom and bust of financial markets, terms such as ‘bull market’ and ‘bear market’ are used. When stock prices fall, it is a bear market, and when prices rise, it is a bull market.
The key to generating profits in markets is to use strategies and ideas that align with the prevailing conditions. This requires consistency, discipline, focus, and the ability to capitalize on fear and greed.
One interesting aspect of stock trading or investing is that a participant can make money in both rising (bull) markets and falling (bear) markets. But then the question arises: which provides more opportunities for investors to make money, bull markets or bear markets?
It is said that bull markets make you feel good and probably make a decent amount of money but bear markets make you rich.
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Bull markets reflect investors’ optimism that strong equity performance will continue for a long time. With these expectations, investors put their money into their preferred stocks and reap the benefit of broader overall sentiments.
It is, however, difficult to predict when trends in the market may change. Investing in bull markets can also be challenging sometimes because psychological impact and speculation have a significant influence. There is no singular, universally accepted metric to define a bull market. However, the most commonly used indicator is a rise in stock prices of 20% or more from recent lows.
In financial terms, a bull market means
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