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What is a Bull Market? Characteristics of a Bull Market Explained
Investing Basics
August 22, 2022

What is a Bull Market? Characteristics of a Bull Market Explained

You may watch the news and hear financial analysts mentioning a bull market. But what is a bull market? What does it mean for the financial market? What does it mean for you? Well, in this post, you’re going to learn the ins and outs of a bull market and how to take advantage of it. 

What is a Bull Market?

You’ve probably heard of a bull market in the financial industry. However, a bull market references not only the stock market but can also refer to anything traded, including real estate, bonds,  and foreign currencies. While a bull market can occur in these industries, what does a bull market mean?

While it is normal for prices to increase and decrease during trading, a bull market is typically a period lasting months or years where prices increase. But what does that look like? Generally speaking, a bull market is when stock prices increase by 20% after two declines of 20% each.

In comparison, there’s also a bear market. A bear market is when the market is experiencing a prolonged decline, with stocks dropping by 20% or more.

How long do bull markets last?

Most investors would love to say that bull markets last forever. But they don’t. Everything must come to an end. While the most recent bull market in the U.S. stock market was the longest one in history, the average bull market lasts just over one year (388 days). And even though bull markets are a dream for investors, they’re typically short-lived.

Are we in a bull market now?

This is a question most people ask. Well, you’ve actually experienced a bull market—more than once. 

Before the Covid-19 pandemic, we were in the longest bull market in stock market history (2009-2020). After the 2008 financial crisis, stocks started to climb until 2020, with the pandemic sending stocks into a sharp decline (bear market). However, this wasn’t the only bull market in recent history. Prior to this latest bull market, we experienced one from 2002 until 2007, which was then followed by the 2008 financial crisis. 

Is crypto in a bull market?

So, maybe you’re in the crypto world already or thinking of entering it. But you have some questions, like, is the crypto market currently in a bull or bear market? That’s a great question to ask. 

As you probably know already, the crypto market fluctuates more dramatically than the stock market. While this year, most cryptocurrencies experienced a decline, this isn’t the first time it’s happened in the crypto market. However, since the last decline, crypto has become more mainstream, so we can expect a bounce back. 

How to take advantage of a bull market

So after reading this, maybe you’re a little spooked out. You’re probably thinking to yourself, is it smart to enter or leave the stock or crypto market right now?

Well, it depends on your situation. During a bull market, many people assume the price of stocks will continue to rise and will typically invest in buying more stocks—which works if you do it right. There are a couple of strategies to help you get the most out of a bull market. Let’s take a look.

Buy and Hold

A basic strategy in investing is buying a particular share, holding it, and possibly selling it later. While this strategy sounds easy, the investor needs to have a level of confidence. In other words, why would you, the investor, hold onto a share unless you strongly believe the price will rise? During bear markets, this strategy is popular as many investors are optimistic.

Increased Buy and Hold

Increased buy and hold is a form of the traditional buy and hold strategy—though it does involve more risk. Like we said above, buy and hold is when the investor holds onto their shares, selling them at a later time. To increase holdings, investors may purchase additional fixed quantities of shares for every increase in the stock price of a pre-set amount. That’s an increased buy and hold. 

Full Swing Trading

This is considered to be the most aggressive way to take advantage of a bull market. Full swing trading is when investors use short-selling and other techniques to receive maximum gains within the bull market.

Retracement Additions

A retracement is a brief time when there’s a temporary reversal of a trend in a stock’s price. Whether it’s a bull or bear market, there will be small dips/rises, even if there’s a clear trend. For example, during a bull market, stock prices may experience a small dip even if the stock price trend increases. Some investors keep an eye out for these retracements in the bull market and aim to buy during those periods. 

We hope this post gives you more insight into what a bull market is. However, it’s important to know that the best way to understand a bull market is to participate in the stock market to get a feel for how the industry works. 

Disclaimer:

This blog is for educational purposes only. The information we offer does not constitute investment advice. Please always do your own research before investing. 

Any views expressed in this blog and by BOTS do not constitute a recommendation that any particular cryptocurrency (or cryptocurrency token/asset/index), portfolio of cryptocurrencies, transaction, or investment strategy is suitable for any specific person. 

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