Bulls and bears are key exchange terms that are used to refer to two options for the behavior of players: making money on rising prices or, conversely, on a fall in the market.
Who are stock bears
People who are not too interested in the game on the stock exchange, as a rule, believe that traders make money from the rise in stock prices, but in fact there are many brokers who, on the contrary, are betting on the fall of the market. Such players are called bears. The principle of their operation is simple: they start selling securities or commodities, increasing the supply to the maximum and driving down the price at the same time. They can also affect the exchange rate.
The term is easy to remember: bears on the stock exchange “press down prices with their paws”, make them fall down, and plunge opponents-players to the ground.
The essence of making bears is simple. They identify a falling asset by tracking price changes for it over time, or they choose an asset whose value they can reduce. Then the bears borrow it for a certain period of time against the security of money in their account and sell it to a third party, again for a certain period. Please note: the bear does not have the asset itself, it only “leases” it.
Then, when the value of the commodity or securities falls to the desired level, the player buys the asset at a much lower price than he sold it, and then returns it to the owner. At this point, the product is already worth almost nothing in comparison with the original price, so the loan repayment turns out to be very profitable. The difference in the amount due to the fall in the exchange rate goes to the bear. The game of these brokers is called “short position” because it is based on quick sales and not on long-term price increases.
Who are called bulls on the stock exchange?
Bulls on the stock market are natural opponents of bears. They do not sell, but buy, artificially increasing demand, and hence the price of goods. After a while, when the value of assets turns out to be high enough, the bulls sell them, and take the difference for themselves. It is the bull games that are considered the most interesting and profitable for traders.
To remember the term, imagine that the bull "raises the prices of the horns", tosses them up.
Bulls, like bears, take a lot of risk during the game. The market can become oversaturated at any time, and asset prices can begin to fall. A recession, if not a collapse, of the market will happen anyway, so traders need to be very careful and be able to choose the moment when to sell the accumulated goods, currency or stocks so as not to lose all their money in the end. In addition, you need to carefully choose the assets in which you can invest, otherwise the game may either turn out to be unprofitable or bring insignificant profit.
