Who are the bears and bulls on the stock exchange?

Good day, dear friends. Ruslan Miftakhov is with you again and I think the time has come to talk about what it means - bears and bulls on the stock exchange and what role is assigned to them in stock trading.

It will be useful for everyone in principle and interesting for those who decide to trade on the stock exchange.

Everyone who is interested in economic and financial news has probably heard at least once who these animals are. What is the meaning of these names?

These horned traders purchase securities in the expectation that their price will rise in the future. Thus, the whole point of their activity is to buy as cheap as possible and sell at a higher price.

Often, this type of investor is looking for those companies on the market that are still undervalued and whose value should grow in the future, in order to sell them profitably later.

If any of you asks about what it means to open a long position, the answer to it will be just the description of this transaction, which was discussed above.

At the same time, the most famous sculpture of this exchange trading player can be seen in New York. The sculpture of a horned bidder is very popular with tourists.

If you try to recall the most popular bull traders, then the name of the notorious Warren Buffett should be mentioned here.

Bear on the stock exchange, what a beast?

When it comes to such a player on the stock exchange as a bear, he, on the contrary, sells assets, predicting a decline in their prices in the future. Thus, the goal of this antagonist is to make a profit on the fall in stock prices, i.e. they sell securities at their peak.

In turn, naming the brightest clubfoot trading participants that the stock exchange has known in its entire history, we should mention George Soros, who managed to make a huge fortune by provoking the devaluation of the British currency with a large-scale sale of the British pound sterling.

How bulls work

Bull-type stock exchange players buy out an asset, which can be in the form of shares or foreign currency, and wait for the moment when its value will noticeably increase. Thus, he manages to make money on the price difference, i.e. the bull is essentially a speculator.

When there is a tendency for the prices of shares and other assets to rise at the auction, it is generally accepted that such a state of the stock exchange should be considered a “bull market”.

Nevertheless, not all investors manage to immediately determine the current sentiments among trading participants. This is very difficult to do, since there is no way to observe the behavior of other players. And to draw some conclusions in this case, you can rely only on various kinds of indicators in the analysis.

Quite often people are mistaken, considering the observed tendency of bullish behavior on the stock exchange to be its positive state. In fact, when the prices of one currency rise, there is a simultaneous fall in the prices of another currency.

Thus, when some participants in stock speculations make a profit at this moment, others are forced to suffer losses.

Bears strategy

As for the clubfoot participants, on the contrary, it is beneficial for them that the value of assets falls. The behavior strategy of this type of stock market players is that they choose those assets, the value of which should fall in the future.

At this moment, the clubfoot takes the securities of this company on collateral, i.e. for example, having borrowed 1000 shares, they immediately sell them at a price of $ 1 per share. Thus, $ 1,000 is credited to their account.

At that moment in time, when the value of the sold assets falls, the bears buy them back, but at half the cost. Having bought the shares of the company, this trader returns them back, earning at the same time on the exchange rate difference of $ 500.

At the same time, the following points should be taken into account in the strategy of exchange players such as "bulls" and "bears".

Both clubfoot and horned players never wait for the right opportunity. These participants in the exchange market always analyze the situation and, based on the results of the analysis, try to predict the likely consequences and dynamics of the movement.

For example, if the bears, guided by certain circumstances and the results of the analysis, assume that the company's expected reporting in the near future will show negative results, then the value of its shares will fall.

Taking advantage of these considerations, the bears quickly sell the company's securities at a still good price and buy again when their value decreases.

Neither one nor the other is waiting for a happy chance and they themselves influence the situation on the market. It is clear that a small volume of securities is not capable of exerting any influence on their quotes.

The situation is completely different when the players have the capabilities and the necessary resources, which allows them to operate in tens of thousands of shares. Then the price will either fall if the clubfoot strategy is implemented, or will rise when the bulls are playing.

And finally, like bears, so bulls do not wait for fortune to smile at them and, if necessary, change their strategy to the opposite. Only experienced traders are capable of this. These players have financial opportunities to play both up and down.

I really hope friends that today's topic has aroused great interest in you. If this is really the case and you would like to continue to get acquainted with the topic about, then subscribe to blog updates.

And that's all for me. Until next time, dear blog readers.

Was with you, Ruslan Miftakhov