Bull and bear on the stock exchange: the “bestial” face of the stock market

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The fact that there are bulls and bears on the stock market has been heard even by people who are far from the exchange industry. These are key trading figures and frequent guests of financial news. It is their actions that explain the ups and downs of stocks and stock indices. Who are they and what do they do? And why did the main characters of the exchange get "animal" names?

What do "bull" and "bear" mean on the stock exchange?

Bulls are traders who play to increase prices. They expect the value of the stock to rise, so they buy it. On the exchange, this is called "opening a long position", or "going long" (from the English long, that is, "long"). When (and if) their expectations are met, they will close the position, that is, they will sell the shares.

Bears, on the contrary, play for a fall. They believe that current share prices are too high and will fall. Therefore, they sell or go short. They also say that bears go short or go short. These terms came from the English short, which means "short" in Russian. After a while, they close their positions - they buy back the sold shares at a lower price.

So, who are the bull and bear on the stock exchange? These are opposing sides, leading an eternal irreconcilable dispute. In other words, buyer and seller.

How the fight goes

The battlefield of modern bull and bear - a table of quotes (in the language of traders - "glass"). The parties fight by placing orders for the purchase or sale. The share price directly depends on who is stronger at the moment - bulls or bears. If the strength is on the side of the former, then the price will rise. Conversely, the more aggressive the bears are, the lower they can push the price of a stock.

Thus, the price movement of any market asset shows how bulls and bears behave on the stock exchange. Example: a company's financials were published, which some traders considered optimistic, while others considered it the opposite. Accordingly, the first group becomes bulls - they buy shares of the company, seeing the potential for their growth. The second group, believing that the shares have no reason to grow, sells them, or shorts them. The outcome of the struggle depends on the one whose belief in his rightness is stronger.

Bull and bear market

So, the bull and the bear on the stock exchange are constantly fighting. Depending on which side wins, the market takes a certain direction. If stocks rise, they say that a bull market has begun. If the advantage is on the side of the bears, then the market, respectively, is bearish.

In addition, there is the concept of market expectation, or sentiment. If a trader is waiting for the price of an asset to fall, they are said to be bearish. If he's waiting to growthe value of the asset, which means that he has a bullish view of the market. At some point, a bear can also be bullish, and vice versa.

Why them?

Why did the bull and the bear become the main characters of the market? On the exchange, the meaning of these symbols is related to the peculiarities of their behavior during the attack. In any case, this is the main version, which has been considered official for several hundred years.

How does a charging bull behave? He tries to raise the opponent on the horns. The buyer in the market acts in the same way - by acquiring shares, he thereby raises their value. The bear, attacking his enemy, beats him with his paw from top to bottom. Similarly, market bears, by selling shares, contribute to a decrease in their price.

Stock trading symbols

The analogy between the behavior of animals and market players, drawn a long time ago, appealed to everyone. The bull and the bear on the stock exchange have become iconic figures and main actors. The main stars of the exchange industry are even immortalized in the form of sculptures. The most famous of them is installed near the largest German stock exchange in Frankfurt.

True, more often the creators tried to capture the bull, because it is he who is the symbol of financial optimism. The most famous statue of this animal is located near Wall Street in New York. It's called "Attacking Bull".

Other residents of the exchange "zoo"

Bull and bear - onexchange are not the only representatives of the fauna. Among traders you can meet, for example, chickens - extremely vigilant, if not cowardly, players. They experience such a strong fear of losses that they rarely open positions. There are also market sheep - traders who trade with an eye on bulls and bears. They usually join the market movement too late, when most of the profits have already been lost. The most greedy traders are called pigs. They try to grab everything to the last, which is why they often stand up against the market or do not take profits in time. This name comes from the British expression "greedy as a pig." There are also market hares - players who make many transactions in a short period of time (scalpers). But there are also honorary titles, such as stock wolf. This is the name of experienced participants who are a kind of market trading guru.

Another representative of the animal world that deserves special attention is the elk. Both the bull and the bear on the exchange try to avoid the elk in every possible way. However, from time to time they encounter him, or rather they catch him. Unlike other animals, the elk is not a type of trader's behavior. An elk is a loss, a negative result of the transaction. This name originates from the English word loss, which means "loss". Not a single trader wants to catch a moose, that is, to receive a loss. But no one can avoid it. Because losing trades in trading is a normal part of the process. However, it is important that the moose are not too big. As they saytraders, do not “feed the moose”, that is, keep a losing position. It needs to be "slaughtered" in time - to sell falling shares or close a short position if they are growing.

The division of traders into bulls, bears and other animal people is very conditional. A bull in a certain period can turn into a bear and vice versa. Sometimes the market is so harsh that the most desperate daredevil trader becomes a chicken. And of course, not a single seasoned wolf is immune from meeting with an elk.