Bull and bear on the stock exchange: the “bestial” face of the stock market In the category Economics & Finance Many people are interested in knowledge and learning about many subjects, this knowledge may be vital at some point in your life, attention enough, and dive into more detail more articles and learn more information about Bull and bear on the stock exchange: the “bestial” face of the stock market.
Bull and bear on the stock exchange: the “bestial” face of the stock market
The fact that there are bulls and bears on the stock market was heard even by ordinary people far from the stock industry. These are key figures of trading and frequent guests of financial news. It is their actions that explain the ups and downs of stocks and stock indices. Who are they and what do they do? And why did the main characters of the exchange receive “animal” names?
What do “bull” and “bear” mean on the stock exchange?
Bulls are called traders who play to increase the price. They expect the value of the stock to rise, so they are bought. On the stock exchange, this is called “open a long position”, or “stand in a long” (from the English long, that is, “long”). When (and if) their expectations are met, they will close the position, that is, sell the shares.
Bears, on the other hand, are playing down. They believe that current stock prices are too high and will fall. Therefore, they sell or open a short position. Bears are also said to short or short. These terms came from the English short, which translated into Russian means “short”. After some time, they close their positions – they buy back the sold shares at a lower price.
So, who are the bull and bear on the stock exchange? These are the warring parties, leading an eternal irreconcilable dispute. In other words, the buyer and the seller.
How the contraction works
The battlefield of the modern bull and bear is a table of quotations (in the language of traders – “glass”). The parties fight by placing orders to buy or sell. The price of the stock directly depends on who is stronger at the moment – bulls or bears. If the power is on the side of the former, then the price will rise. Conversely, the more aggressive the bears are, the lower they can lower the value of the stock.
Thus, the price movement of any market asset shows how bulls and bears behave on the stock exchange. Example: published the reporting of the company, which some traders considered optimistic, and others – on the contrary. Accordingly, the first group becomes bulls – buys up the company’s shares, seeing the potential for their growth. The second group, believing that the shares have no reason to grow, sell them, or short. The outcome of the struggle depends on whose belief in his rightness is stronger.
Bull and Bear Market
So, the bull and the bear on the stock exchange are constantly fighting. Depending on which side wins, the market takes a certain direction. If stocks go up, they say there’s a bull market. If the advantage is on the side of the bears, then the market, respectively, is bearish.
In addition, there is the concept of market expectation, or sentiment. If a trader expects the price of an asset to fall, it is said to be bearish. If he expects an increase in the value of the asset, then he has a bullish view of the market. At a certain point, a bear can have a bullish mood, as well as vice versa.
Why did the bull and bear become the main characters of the market? On the stock exchange, the meaning of these symbols is related to the peculiarities of their behavior during the attack. In any case, this is the main version, which has been considered official for several hundred years.
How does an attacking bull behave? He tries to lift the opponent to the horns. The buyer in the market acts in the same way – by purchasing shares, he thereby raises their value. The bear, attacking his enemy, beats him with his paw from top to bottom. Similarly, market bears, selling shares, contribute to a decrease in their price.
Stock Trading Symbols
The analogy drawn a long time ago between the behavior of animals and market players was to everyone’s liking. The bull and the bear on the stock exchange became cult figures and protagonists. The main stars of the stock exchange industry are even immortalized in the form of sculptures. The most famous of them is installed near the largest German stock exchange in Frankfurt.
True, more often the creators tried to capture the bull, because it is he who is a symbol of financial optimism. The most famous statue of this animal is located near Wall Street in New York. It’s called “Attacking Bull.”
Other residents of the stock exchange “zoo”
The bull and the bear are not the only representatives of the fauna on the stock exchange. Among traders, you can meet, for example, chickens – extremely vigilant, if not to say cowardly, players. They experience such a strong fear of loss that they open positions extremely rarely. There are also market sheep – traders who trade with an eye on bulls and bears.
They usually join the market movement too late, when most of the profits have already been lost. The most greedy traders are called pigs. They try to grab everything to the last, which is why they often stand against the market or do not fix profits in time. This name comes from the British expression “greedy as a pig”. There are also market hares – players who make many trades in a short period of time (scalpers). But there are also honorary titles, for example, the stock wolf. This is the name of experienced participants who are a kind of guru of market trading.
Another representative of the animal world that deserves special attention is the moose. Both the bull and the bear on the stock exchange try to avoid meeting with the moose in all possible ways. However, from time to time it is encountered, or rather it is caught. Unlike other animals, moose is not a type of trader behavior. A moose is a loss, a negative result of a transaction. This name originates from the English word loss, which means “loss”. No trader wants to catch a moose, that is, to make a loss. But no one can avoid it. Because losing trades in trading are a normal part of the process. However, it is important that the moose are not too large. As traders say, you should not “feed the moose”, that is, hold a losing position. It needs to be “slaughtered” in time – to sell falling shares or close the short position if they grow.
The division of traders into bulls, bears and other animal people is very arbitrary. A bull in a certain period can turn into a bear and vice versa. Sometimes the market is so harsh that the most desperate daredevil trader becomes a chicken. And of course, no seasoned wolf is immune from encountering a moose.