Quite often, a trader can hear or read that at the moment bears dominate in Forex, that a beginner trader can be misleading, and therefore it is necessary to understand such concepts and terms before starting work.
What is a Bearish Market?
When the price falls in the market or the bear market is observed, this indicates a situation in which the majority of traders trade for a fall. As a rule, actions are carried out only on one or several trading instruments.
The initiators of this trend are “bears” – these are traders interested in lowering the value of a certain currency pair. When such participants reach the amount sufficient for a decisive role in the market, the Forex market becomes “bearish”.
Studying the terms of Forex, it should be borne in mind that when a bear market occurs on the exchange, a downtrend is formed, the number of sell transactions is constantly growing, and this, accordingly, contributes to an even greater decrease in the value of a currency pair.
Working for the fall, the “bears” are trying to get as much profit as possible from the previously concluded orders to sell the currency. The lower the rate the trader can close the deal, the more profit he will get.
Features of “Bear Hunt”
You shouldn’t worry, if only because the bearish trend ends sooner or later. And you can make money even in a downtrend. And not bad enough to ensure a comfortable existence. The main thing is to be a master of trading. Or simply, a good currency trader.
First of all, you need to wait until the chart approaches the oversold point. This is a sure signal that the trend will change. After that, it is a good idea to wait for the news. It is also relevant to take advantage of Forex bonus offers provided by brokers to use the available money to the maximum. Remember, the more money you have the more is the chances to make profits in the market.
However, trading on a downtrend is quite possible. Maybe you don’t need to wait for his change and rush into battle right away? Well, why? After all, there is a red button for concluding a deal on any trading platform. You just need to click and trade.
Working in a Bear Market
It is relatively uncomplicated, but it has some peculiarities. The trader should take into account that the trend existing at a particular moment cannot last forever and, sooner or later, will be replaced by an upward trend. That is why when opening sell deals in a bear market, you need to determine how long this trend will last. Only after this can the trader place a new order.
As a rule, a reversal occurs when the market enters the oversold zone, and sellers are no longer satisfied with the existing price. In addition, strong positive news regarding the base currency in the traded currency pair can contribute to a trend change – in this case, the bears also fail to hold the market, and therefore they begin to close existing deals.
At the moment, a greater number of traders are making purchases in order to earn on the subsequent growth. As soon as the demand starts to exceed the supply, the direction of the market movement changes, it starts to grow, or in other words – it turns into “bullish”.
While undergoing Forex training, a trader must pay very serious attention to analysis and forecasting, which will be needed in any case. The bear market is dominated by a downtrend, so most traders open buy deals, but only experienced traders know exactly when the current trend will change and can make money on it.
Trading Features
The bear market has a distinct advantage – it is much quieter than the bull market. Very rarely, sharp price changes occur on it. The reason for all the problems is that traders are used to expecting prices to change dramatically and are betting on this, which happens on a subconscious level. In a bear market, such expectations rarely come true, and cognitive dissonance arises. It is so lethargic, sleeping for a long time, not decisive, like bulls. Consequently, the trader is imbued with such an atmosphere.
All this creates difficulties when opening a position. And day traders are even worse because they constantly trade with the high volatility of quotations, which the gradual movement of value makes them very nervous.
There are different situations in the Forex market. One of them is called the dead zone. This is a very boring period, nothing happens, there is no trend. Traders can sleep, try to trade flat with small profits and high risks, or simply watch videos of cats.
The important thing is that a bear market is almost a permanent dead zone. Of course, the market moves, but it is sluggish, it inspires pessimism, and traders can not stand it. They simply close positions with losses, resigning themselves to their bitter fate.
