The Forex Bear and Bull

The forex or the foreign exchange market is where the currencies of different countries are traded on a daily basis. Currency prices in the forex have been described as volatile. They are always trending up and down and market movers attempt to predict this movement all the time. And despite the massive volume of trades in the foreign exchange market the price changes are slight and this makes the market very liquid. Its volatility and liquidity have given this old market a couple of suitable distinctions at a point in time. The market can either be a bear or a bull.

There is a distinct language in the forex world. If one is attempting to set foot in it, one should know what to expect. More often than not, you will hear currency traders say that the market is bullish lately, or that it's been a bear market so far. These terms describe the status of currency prices at a particular moment. A bear market is when currency prices are dropping. A bull market is when currency prices are rising.

A bear market is distinguished when prices are dropping down, like a bear going on hibernation. But it should not be mistaken that market activity is slowing down because it's not. The forex is a 24-hour market that is always active. A bear market is favored by traders who strategize to benefit in that situation by selling when prices were up. These traders will act on dropping prices by buying back currency in a bear market at a profit.

A bull market is distinguished when prices are going up, like a bull raging at a matador. This market is favored by those who have set up trades to earn a profit in this situation. Currency traders, who have bought currency at a bear market, will profit when they sell at a higher price in a bull market.

Currency prices in the foreign exchange market are constantly moving numerous times in a single trading day. These price movements have been called volatile and liquid. Like the changing of the seasons in the real world, the forex world similarly has changes of season as well though they may not be as predictable as winter, spring, summer or fall. The market seasons distinguish the market as prices are moving. So, when prices are going up it is called a bull market, and when prices are going down and it's called a bear market.


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