Tuesday, 23 June 2015

Ride the Bull,Ride the Bear

One would have commonly heard the words "Bull Market" or "Bear Market". Did you know that the average investor detects the Bull market only at the near end of the move and the Bear Market to be so very painful that the investor either holds all his stocks and gives up, once again, at the near end of the Bear Market?Most investors give up mid-way and never enter the Markets again. Did you know that there are ways to be able to spot the Bull before it makes its run upwards and gives up his positions before the Bear takes total grip?Did you also know that Professional Traders/Investors make profits from the Bear Markets as well and are able to sell first and buy back later and thus gain in what is deemed as a Crash and the onset of Bad times?
 
Stock Markets move in upswings and downswings .They are called the Bull Markets in upswings, and Bear Markets in downswings.

The Bull Market

 
Deemed by novice investors as positive, a smile on their faces through the day as their funds get on to the positive and their investments multiply ,the Bull Market is associated with all things positive. Great adjectives on the smiling side are attributed to these years as wealth managers go their merry ways to get clients on board and traders and investors who love anything "up" and "positive" start flooding the markets. Bull markets strongly start attracting investors as it gets vertical, more climactic as neighbours and associates laugh at the person yet to get into the markets, as easy money gets made, and as is the nature of the human mind, everything that goes up will always keep going up. Reality though is far from it.

 
The Bear Market

 
Deemed by novice investors as negative, a frown on their faces through the day as their funds get on to the negative and their investments lose value ,the Bear Market is associated with all things negative. Great adjectives on the frowning,sulking side are attributed to these years as wealth managers  still go about their merry ways to get clients on board with a promise that as markets drop, these are actually discount rates and one should keep buying as markets plummet. Novice traders and investors who hate anything "down" and "negative" start leaving the markets. Bear markets strongly start sending investors into a panic as prices gets vertically down. Fear grips everyone as stocks and commodities bought during various phases of the Bull Market now start crashing. Doom and Gloom fill everyone's mind as neighbours and associates laugh at the person getting into the markets. There is pain, there is fear, there is doom, there is chaos, and there is gloom, and as is the nature of the human mind, everything that goes down must always keep going down. Reality once again is far from it.

 
Identifying Bears and Bulls

The true Bull Market, the Uptrend, starts at a point where investors and new traders have given up hope that this Market will ever rise again. The true Bear Market starts at a point where the Investors are at the heights of Euphoria. The Professional Trader uses charts, many professional investors do the same ,for the chart correctly depicts human emotions and their play. Correct  decisions can be made with correct reading, correct reading comes from correct knowledge and the exact point where the Bull starts and ends,and where the Bear starts and ends can be accurately determined.

 
Riding The Bull

With correct knowledge, the Bull Trend can be detected far before the smiles come onto the faces of the common folks. Far before it practically gets impossible to get onto it, let alone Ride it. Do notice that the word used is " detected", not anticipated, not predicted, not guessed .It can be accurately detected and ,following all the Rules and adhering to the Knowledge that we have, that Trend can be ridden.

 
Riding The Bear

This is the Big Negative, the place and time for tears to flow and gush forth, but on the contrary, this is the time where the Pro Trader is all smiles ,the Pro Investor who is a Bulls only Investor is also all smiles as he awaits his next opportunity. They are far from tearful. Professional traders make huge gains during this time. Frowns and tears continue for the novices as Professionals step in, with glee and capitalize on the tears of the others. The Bear Market can be detected by correct knowledge, and the Bear too can be ridden to its final move.

Conclusion

Human emotions are at play when one gets into the markets. One must learn how to correctly identify change in trends. Price action trading eliminates the focus on the Bear and the Bull, it changes the focus from up and down to correct and incorrect. Huge gains can be made either directions. For that, Knowledge ,as always, is Key.

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