The fact that there are bulls and bears on the stock market, even residents far from the exchange industry have heard. 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 are they doing? And why did the main characters of the exchange get "animal" names?
What does “bull” and “bear” mean on the exchange?
Bulls are traders who play to increase prices. They expect stock prices to rise, so they are being bought. On the exchange, this is called "open a long position", or "stand in 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 stock prices are too high and will fall. Therefore, they sell or open a short position. They also say that the bears are short or short. These terms come from short English, which in translation into Russian means "short." 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 the warring parties, leading an eternal, irreconcilable dispute. In other words, the buyer and seller.
How does a fight happen?
The battlefield of the modern bull and bear is the quotation table (in the language of traders - “glass”). Fighting parties by submitting applications for the purchase or sale. The share price directly depends on who is stronger at the moment - bulls or bears. If power is on the side of the former, then the price will rise. Conversely, the more aggressive the bears are, the lower they can lower the value of the stock.
Thus, the price movement of any market asset shows how bulls and bears behave on the exchange. Example: published company reporting, which some traders found optimistic, while others - on the contrary. Accordingly, the first group becomes bulls - it buys up the company's shares, seeing the potential for their growth. The second group, believing that the stocks have no reason to grow, sells them, or shorts. From the one whose faith in their righteousness is stronger, and the outcome of the struggle depends.
Bull and bear market
So, the bull and bear on the stock exchange are constantly fighting. Depending on which side wins, the market takes a certain direction. If stocks rise, they say a bull market has arrived. If the advantage is on the bear side, then the market, respectively, is bearish.
In addition, there is the concept of market expectation, or mood. If a trader expects an asset price to drop, they say that it is bearish. If he expects an asset value increase, then he has a bullish look at the market. At some point, a bear can have a bullish mood, as well as vice versa.
Why exactly them?
Why did the bull and bear become the main market characters? On the exchange, the meaning of these symbols is associated with the features 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 an attacking bull behave? He tries to raise his opponent by the horns. The buyer acts in the same way on the market - by purchasing shares, he thereby raises their value. The bear, attacking his enemy, hits him with his paw from top to bottom. So market bears, selling stocks, contribute to lower prices.
Stock Trading Symbols
The analogy drawn long ago between the behavior of animals and market players appealed to everyone. The bull and bear on the stock exchange have become cult figures and main characters. 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, the creators often tried to capture the bull, because it is he who is a 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 stock "zoo"
The bull and the bear are not the only representatives of the fauna on the stock exchange. Among traders you can find, for example, chickens - extremely alert, if not cowardly, players. They are so afraid of losses that they rarely open positions. There are also market sheep - traders who trade with an eye on bulls and bears. Usually they join the market movement too late, when most of the profits are already lost. The most greedy traders are called pigs. They try to grab everything to the last, which is why they often stand against the market or do not take profits on time. This name comes from the British expression "greedy like a pig." There are also market hares - players who make many transactions in a short period of time (scalpers). But there are honorary titles, such as the stock wolf. So called experienced participants, who are a kind of guru of market trading.
Another representative of the animal world that deserves special attention is the moose. Both the bull and the bear on the stock exchange try to avoid meeting with the elk in all possible ways. However, still from time to time they encounter him, or rather they catch him. Unlike other animals, an elk is not a type of trader behavior. Elk is called a loss, a negative result of the transaction. This name originates from the English word loss, which means "loss". No trader wants to catch a moose, that is, to receive a loss. But no one can escape this. Because losing trades in trading are a normal part of the process. However, it is important that the moose is not too big. As traders say, do not “feed the moose,” that is, keep a losing position. It is necessary to “kill” it in time - to sell falling stocks or close a short position if they grow.
The division of traders into bulls, bears and other animal people is very arbitrary. 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 safe from meeting with a moose.