If you are an avid follower of trading, stocks and cryptocurrencies, you may have heard the terms bullish and bearish when market conditions are being discussed. While they may sound a bit outlandish, they are simply general terms that describe whether stocks are rising or falling in value at any given time.
While they aren’t as complicated as they may seem, they can have a significant impact on your portfolio and having a good grasp of the intricacies of each can be worthwhile.
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Bullish trading
When investors take a bullish position, they are relying on the value of individual securities, like stocks, crypto coins, or even NFTs to rise. Essentially, bull traders strive for more and often suffer from the fear of missing out (FOMO). An example of bullish trading is quickly identifying an asset that is doing well and investing before peak prices are reached. There is no set percentage to gauge just how great the increase in an asset will need to be to qualify.
Bearish trading
As you may expect, bearish traders have the opposite sentiment and are working from the expectation that certain assets are likely to decrease in value (this can refer to both long-term predictions and significant drops). As an example, many bearish traders follow the latest news for anything that may have an immediate negative impact on stock prices, as well as tracking historical data to determine when drops will occur. They will sell assets before predicted/potential losses can occur.
Which method is best to incorporate into trading strategies
One of the advantages of being a bullish trader is that gains can be fast and high, whereas, with bearish endeavours, the main benefits are that risks are reduced and losses are minimised. The good news is that traders don’t need to stick to just one strategy and can switch between the two depending on their needs.
A great way to determine which will be more beneficial for your trading style overall is defining your goals. When you understand what drives your endeavours, you will be in a better position to select the right strategies to implement as you trade. You can find more information here.
Sentiment analysis tools can be an asset when taking either position, as these will allow traders to gain insight into the psychological aspects of market trends and the way that other investors and traders are working. As emotions can impact the values of shares and cryptocurrencies on the whole, visit StockGeist.ai for a greater understanding of these strategies and the current market climate.
