Bulls and Bears (Bull and Bear)
In fact, the origin of these stock exchange terms is more complicated and curious. And, of course, their history is closely connected with the great-grandmother of all stock exchanges - the English one. Interestingly, the first stock exchanges originated in the 17th century in London's coffee houses, where traders met to discuss their participation in ventures.
The stock exchange historian E. Morgan tells such a curious fact: ".
As for , the origin of this concept is interpreted roughly as follows: usually London brokers of that time liked to amuse themselves by watching bear and bull competitions, which were held in the center of the City on the Thames. Thus the bull became the natural opponent of the bear.
It is said that it all came from London. At the beginning of the XVIII century there was a popular colleague of Jonathan Swift satirist John Arbetnot, who in 1712 came up with a character named John Bull (Bull). It was an image of a typical Englishman in the form of a bull, dressed in a vest, a cylinder, with a cane. John Bull was most annoyed with his jokes about the bear.
There is a version about the existence of a certain feuilleton, the plot of which takes the reader to one of London's coffee houses, where brokers made deals with stocks and where the heroes - and - clashed. Thus was born a successful image, picked up by the stockbrokers of the world.
In 1886, a picture of a bear and a bull fighting appeared on Wall Street. It was the first time the New York Times read: "".
today sees this dispute as over: the bronze sculptures of a bear and a bull at the entrance seem to symbolize the victory of the bulls. On the face of it, this is true. But all that is known for sure is that the bear was first in the ring.
Stock exchanges in different countries of the world have their sculptural compositions. Somewhere they are present together, somewhere only the bull. The most famous ones are located in New York (a bull near the Wall Street Exchange), in Frankfurt am Main (a bull and a bear) and in the Shanghai Exchange building (a bull). They symbolize the eternal struggle of stock exchange players, playing to increase or decrease the value of securities. Those who play up are called bulls and those who play down are called bears.
We have already used the terms many times in this article. Now it is time to consider the whole stock exchange "zoo". Traders and investors are divided into 4 categories depending on their strategy and tactics in financial markets:
We'll look at each type of investor separately.
It is also common to associate the state of the market with its key players. For example, on everything is going up. In a bullish market condition, the economy is growing, unemployment is down, the economy is picking up steam, and stocks are going up as well. It's much easier for bulls to pick stocks to invest in, since essentially just about everything is going up in price. But it is only necessary to remember that there is no eternal growth and that eventually there will be a downturn (if I had known when, I would have lived in Sochi or Bali).
Bulls need to be careful, as the market may become oversaturated and the shares will become overvalued. In this case, a decline is inevitable. One should be able to get out of a bull market in time.
In bear markets, the opposite is true: unemployment is up, GDP is down, and so is the stock price. It's hard to find a stock that you can profitably invest in. But that doesn't mean you're always on the losing side: there are special techniques, strategies and trading algorithms that allow you to take significant profits in falling financial markets and stocks.
By the way, Wall Street's most ace traders often get rich during bear market conditions. You can, for example, use the short-selling technique (borrow shares, sell them high, then buy them cheap and pay back the debt), or wait until the bearish trend comes to an end (which is bound to happen at some point) and buy more shares before the market rises.
They are so vigilant that they very rarely invest. That is, their fear of loss is so great that they are afraid to enter the market, like wise gudgeons.
In part, they can be understood: it is better to sleep well than to enter the market and suffer from fear, stay awake and waste your health. But there is a limit to everything: it is impossible to beat the financial market without trading on it!
Pigs are not afraid to take risks, and this lack of fear transcends all imaginable norms. In the pursuit of crazy profits, pigs do not think about what they invest in. They are very impatient, emotional and greedy companions. As a rule, pigs find it very difficult to beat the market and most often they are left with nothing because of their irresponsibility. Professional players of financial markets love pigs because, due to their antagonistic nature (someone won means someone else lost), it is the pigs who pay for the profits.
Thus, it turns out that all players of financial markets are of 4 types, and the whole market is a kind of financial zoo (or farm). So, to which type of investors do you belong?
A humorous video about how to fight on . Sparring fight although comical, but sometimes every trader wants to knock someone after the market went the wrong way.
Therefore, our recommendation is: "Computer and PDA have nothing to do with it, hit a punching bag, or in extreme case some bull.
It is not a secret that on the Internet you can find a lot of analytics on the market , , , , etc. How can you use this information? Of course, you should not just follow it. Analytics is viewed by quite a large number of people and by analyzing several forecasts from different sources, a trader can assume how the crowd thinks. If we talk about specific tools, we can give an example of a list of forecasts on any analytical site.
It presents several types of analytics on the most popular currency pairs, and it can be seen that some of them predict growth, while others predict a fall. From this kind of information, you can make the right selection and use it as .
Bulls and Bears in ForexOne of the most objective tools of market sentiment is , it looks like this:
The percentage of traders who have opened buy or sell trades varies depending on the market situation. At a very large skew, for example, 80-90% . Here the long-standing rule is triggered, according to which at such a percentage a reversal will soon occur.
There are a huge number of them. For example, let's take an indicator based on volatility and an indicator showing the market mood based on volumes. We will not consider the details of working with them now.
A popular indicator that does a good job of showing /oversold is . It uses the default levels of 30 and 70, but it is recommended to add 50, which will show who . If the RSI chart is above the 50 line - the "bulls" dominate, if less than 50 - the "bears".
Other indicators such as Stochastic, Momentum, ATR work on a similar principle.
SOT reports should be used as , although some traders take them as a basis for their trading. In terms of understanding market sentiment, this is the way to go, as it is indeed a very objective tool.
It is an instrument not for intraday, but for , that is, for timeframes above the hourly. The SOT reports are based on derivative financial instruments - futures and . They are published every Friday by the Commodity Futures Trading Commission (CFTC).
Under U.S. law, all transactions that take place in the futures and options markets in the U.S. must be registered and monitored by a regulator, which is the CFTC. The SOT reports contain both institutional large and small speculators and are a great source of information for us to assess how strong the bullish and bearish positions are.
In the reports we are interested in such indicator as - the aggregate position, i.e. if the size of the aggregate position is 100 contracts, it is the difference between the volumes bought and sold. The reports are publicly available on the cftc.gov website.
Let's take a closer look by clicking on Short Format:
The psychology of trading of the largest market participants is, in fact, . Further, if we see a similar ratio in large speculators - this is a confirmation of the existing trend. And high data on small speculators, as a rule, indicates the end of the trend.
- open interest. It is important to consider in dynamics. If it is high or low, the market is either overbought or oversold.
Data from SOT reports on some resources are used in the form of graphical schemes, revised tables, and often with ready-made trading signals.
Thus, there are many ways to determine the mood of the market, who is stronger now - bulls or bears. You can use any of them, it all depends on the depth and source of the traders' position skew.