What does Bullish and Bearish mean?
These are terms that you’ll see if you’re in the trading community. They can be very confusing terms when you are first starting out, but within time you will start using them too. Bullish is a term used to indicate that the chart is moving upward. This means that the stock is gaining a positive percentage and will be colored green on most platforms. Bearish is a term used to indicate that the chart is moving down. This means that the stock is losing a percentage and will be colored red on most platforms.
Notice that these terms do not mean profitable or unprofitable – Just because the stock is going down does not mean it’s unprofitable. The market is all about trends and you can make money on any trend. When a stock has a bearish trend, traders will often use options or contracts to still make money. The contracts allow you to lock in a price for the stock, meaning that you can lock in a price before it drops more and you’ll always be able to sell stock at that price. Options and contracts are not a basic trading tactic and can be difficult to use effectively.
A large part of the trading community is making predictions on the outcome of a stock. Traders will often take a Bullish or Bearish position depending on their interpretation of the current micro or macro trend. Remember to always due your own interpretation of a stock before you buy. Chart interpretation is a learned skill and the more you practice and expose yourself to variations, the more you will learn. One good tactic to learn while you are trading is to follow-up on previous Bullish or Bearish stocks once the trend has been confirmed. Look at the charts and try to understand how the community predicted the outcome – soon you’ll be seeing patterns and making accurate predictions also!
The best way to remember the difference between a bullish and bearish chart is to think of a Bull’s horns, which are pointing up, like the chart.