Playing in the cryptocurrency market brings income depending on the investment and skill of the trader. To achieve successful results, you should study general trading concepts, learn who the top players are, what does bullish mean in the stock market, as well as a number of important rules and theses. Pay attention to the other trading terms explained in the article.
Cryptocurrency market zoo: bulls and bears
There are two main participants who buy and sell digital money - the bulls and the bears. These traders seek the same goal - to make money from cryptocurrency transactions. However, they approach the method of achieving the result differently.
Consider, what it means to be bullish. It is the name of a cryptocurrency market player who invests in currencies or buys digital coins when their value declines. Thus, bulls, when buying assets, open long positions. This means that the deal can last indefinitely. Closing - selling cryptocurrency - occurs when the price rises. The difference between the amount bought and sold makes a profit.
Bulls represent the majority of players in crypto trading. This is due to the fact that there is less risk, and it is suitable for both beginners and experienced traders.
In order for you to have a complete understanding of this topic, let us briefly tell you who the bears are. They are the type of player who is the exact opposite of a bull. In other words, they are traders who analyze the market looking for a currency that is about to fall in value - that is, they make money in a falling market.
On top of that, they sell coins that don't belong to them, such as borrowed ones. Then the bears buy them back at the lowest price, return the coin to the owner, and make money on the difference in value after the debt closes. This strategy is called shorting.
The main difference between bulls and bears lies in the strategy used to achieve profit. The actions of bulls in cryptocurrency are to buy crypto instantly that are striving for growth. They expect the value of the currency they bought to rise. To do this, they conduct a detailed analysis, study the demand prospects, and then immediately buy the cryptocurrency. The most appropriate time to sell is the peak of the price. Experienced traders easily determine this moment. This is a bullish meaning in the stock market.
Bears do not buy but sell the coin to make a profit. This method of making money also involves analyzing the market, but the focus is on finding factors that contribute to a collapse in asset prices.
What does very bullish mean? If we look at the term from a trading perspective, it means that the trader is very confident that the price of the cryptocurrency he bought will rise.
What does bullish mean for stocks?
What does bullish mean in finance? Simply put, it is a period of rising prices. This concept can be applied to any component of the financial market. The duration depends on many factors, ranging from global economic indicators to the volume of assets put on the market. The duration can be weeks, months, or even years. Formally, the following schema has been established to determine the beginning and end of a bull market:
- a 20% rise in value - is the beginning;
- a 20% decrease in value - is the end.
The time of a bull market is characterized by an optimistic mood of traders, economic growth, and stability. The trend can change at any moment. It's very hard to know in advance when a long period will end.
As you understand, bulls trade not only on the cryptocurrency market. For example, let's take a look at what does bullish mean in stocks. It is a fairly simple concept, the meaning of which can be understood from its name. Market participants make money on the difference in the value of securities, using a bullish strategy - buying stocks at a lower rate and then selling them at a higher value.
Traders can invest not only their personal savings but also trade with a broker's leverage. As a rule, the second option is preferred by professional players, for whom crypto-trading is the main way to earn money. That is what does bullish stock mean. It is not recommended for beginners to use leveraged funds because the market is quite unpredictable. The expected growth may not happen, or it may turn out to be lower than expected. Of course, it will have a negative impact on profit. In addition, you should remember that debt imposes a lot of responsibility, so this is what experienced traders with a lot of knowledge and skills work with.
In addition, most traders, both bulls and bears, prefer crypto automation trading, using various trading platforms, trading robots, and so on. In other words, they trust the software to do what they could do themselves, thereby saving time and avoiding many human mistakes.
Now, let's understand when to expect a bullish trend in the financial and cryptocurrency markets. It is preceded by a series of events. You can make assumptions and determine the period of market turns on a relatively fuzzy time frame. This is due to numerous components affecting the state of the cryptocurrency market. A trader needs to understand what does bullish mean in stock market, learn the basic laws of the cryptocurrency market, and be able to use various analytical methods - such as charts, Japanese candlesticks and other technical analysis tools. This will help to make the right decision in time, to enter the "wave" and be on its peak.
In order to get the maximum profit during the "bullish" period, it is necessary:
- Catch the beginning of the trend and take a "long" position.
- Constantly watch the changes of the market.
- Sell assets before their prices fall.
A "bull market" begins after certain trends that precede this period. Let's list the particularly significant ones:
A steady decline in the value of coins, stocks and other investment instruments. As a rule, if you study the market in detail at this time, you can notice patterns that indicate that the trend is about to change.
Flat. This is the name of an insignificant fluctuation in the value over a long period of time. In this case there is no bright and obvious rise and fall of the price, the indicators keep in one range.
The situation occurs after a sudden and sharp increase in demand, provoked by the appearance of a large amount of free funds from buyers. As a result, the value increases (often unjustifiably). The duration depends on the influence on the situation of investors seeking to dump assets and the number of buyers willing to buy them for a specified value.
With high demand and low supply, the level of high prices will be held as long as possible. That is, a period called a long-term rally will begin. If there are equal sellers and buyers or much fewer buyers, the time frame will be considerably narrowed and the peak of high prices will pass quickly - this situation is called a short-term rally.
In addition, there are other factors that precede a bullish period. Small spikes can be the result of a series of news (real or fake). They can unbalance the stock market and affect supply and demand regulation. An increase in buying activity within a particular brand increases the value of a stock. The same can be said for crypto-trading. Buying a large quantity of a particular coin increases its popularity and therefore its value. The emergence of a new product causes a similar effect with a short-term rally.
The beginning of long-term rallies is facilitated by changes in the tax system and regulation of certain areas of business. The demonstration of positive changes shows a good result. This leads to higher levels of investment by traders and a shift of capital from one industry to another.
Strategies for bulls in crypto trading
Once again, let's briefly explain the basic concepts. Trading is buying and selling assets on an exchange. Crypto trading is making buy/sell transactions on a cryptocurrency exchange. Strategies for profits depend on the choice of position ("bulls", "bears" and others). Learning trading terms and definitions will help to understand how to maximize profits.
Participants' profits are taken from the difference between the cheaper buy price and the more expensive sell price of the cryptocurrency. There are several strategies used by bulls. Some of the most common include the following:
- Buy and sell. This is a basic strategy that involves buying stocks, coins or other assets in order to sell at the highest possible price. The investor waits for the value to peak, assumes it won't rise later, and sells the assets.
- "Buy and hold." The strategy is designed for a long period of time. The working principle is the same as in the previous case. The difference is that coins and stocks are held for a longer period of time until the most profitable time to sell. During this period, it is possible to increase the asset through additional purchases.
- Buying during corrective declines. A stable bull market is characterized by periods with slight fluctuations in value. The trader catches the moment and buys the currency at the moment of "minimum" and waits for the following growth of cost. Such correction allows bulls to quickly invest in assets. Price declines are short-term in nature, so a bull is required to make quick decisions.
- Making profits as a result of short-term price fluctuations. Assumes an active position, determination and good market knowledge. It enables you to make a quick profit on a slight and rapid rise or fall in value.
Understanding what does bullish mean in trading allows you to choose the right position and earn the maximum possible amount.
Often, novice crypto-traders intuitively choose one or another strategy. In the absence of specialized knowledge and understanding of professional terminology, some of them work and do not suggest that they are "bulls", "bears" or other players. Understanding the basics means being able to use a number of tools inherent in trading.
In conclusion, let's ask again - What does bullish mean in stock and crypto? First, it means the trader's confidence that the market will grow. Trading assets during this period will give the opportunity to get the maximum profit.
Every day new technological solutions are developed, and proven ones are improved, large-scale transactions are made, startups appear, changes in legislation are made - this does not go unnoticed in the cryptocurrency market. Now newcomers can successfully enter the market, as cryptocurrency is on trend and its popularity will grow. So, if you want to use a bullish strategy in your trading, study this article again, get acquainted with basic tools of technical analysis and try to start trading.