What’s a good way to remember the difference between a bull and bear market?

Bear and bull market concept is really very important to understand in trading world.

Trading has a language of its own, and if you are starting out long or short, bullish and bearish are trading terms you will hear frequently. Bullish and Bearish are simply terms used to characterize trends in the currency, commodity or stock markets.

The terms bullish and bearish are often used to describe the conditions in the market or the sentiment of investors. They are very important terms and are used in nearly all types of trading, from currencies to stocks. Traders can take advantage of both bullish and bearish markets if they have sufficient knowledge of the market conditions that are associated with these cycles. When traders understand the meaning of bearish and bullish and are able to identify the cycles, they will know how to profit off of any market condition.

What is the difference between Bullish and Bearish Market?

Bearish and Bullish are simply terms used to characterize trends in the currency, commodity or stock markets. If prices tend to be moving upward, it is a bull market. If prices are moving downward, it is a bear market. Of course, this doesn’t have to refer to the market overall.

BULL MARKET

A bull market is a financial market of a group of securities in which prices are rising or are expected to rise. The term “bull market” is most often used to refer to the stock market/Forex Market can be applied to anything that is traded, such as bonds, currencies and commodities.

Point To Remember about Bull Market:

Bull markets are characterized by optimism, investor confidence and expectations that strong results should continue, usually for months or years.

• Bull markets generally take place when the economy is strengthening or when it is already strong.
• It happens in line with strong gross domestic product (GDP), and a drop in unemployment and will often coincide with a rise in corporate profits.
• The overall demand for stocks will be positive, along with the overall tone of the market. In addition, there will be a general increase in the amount of IPO activity during bull markets.
• Investors who want to benefit from a bull market should buy early in order to take advantage of rising prices and sell them when they’ve reached their peak.
• Although it is hard to determine when the bottom and peak will take place, most losses will be minimal and are usually temporary.

• In times of a bull market, security prices, once again, in certain sectors or as a whole, are increasing and/or expecting to increase and also show signs of increasing at a more rapid rate than the historic average. If a market or the market is bullish, investors gain confidence that the prices of securities will continue to rise over an extended period of time and will invest. Bull markets often occur at times of economic recovery or economic boom and the psychology of investors plays an intricate role in the market. In order for a market or the market to be classified as a true bull market, technical analysts need to state that there is a rise in the value of the market of at least 20 percent.

BEAR MARKET

A bear market is a condition in which securities prices fall and widespread pessimism causes the stock market’s downward spiral to be self-sustaining. Investors anticipate losses as pessimism and selling increases.

The term “bear market” is the opposite of a “bull market,” or a market in which prices for securities are rising or will expect to rise. It is named for the way in which a bear attacks its prey — swiping its paws downward. This is why markets with falling stock prices are called bear markets. Just like the bear market, the bull market is named after the way in which the bull attacks by thrusting its horns up into the air.

Point To Remember about Bear Market:

The causes of a bear market often vary, but in general, a weak or slowing or sluggish economy will bring with it a bear market. The signs of a weak or slowing economy are typically low employment, low disposable income and a drop in business profits.

• In times of a bear market, security prices are decreasing and/or expecting to decrease and also show signs of decreasing at a more rapid rate than the historic average.
• In order for a market to be considered bare, opposite of a bull market, prices fall by 20 percent or more.
• During times of decline, investor psychology turns to fear and pessimism and traders lose confidence in the market.
• Bear markets slow the market down entirely by becoming the driving force behind unemployment and inflation.

One of the key benefits of forex trading is the opportunity it offers traders in both bull and bear markets. This is because forex trading is always done in pairs, when one currency is weakening the other is strengthening thereby allowing you to take advantage of rising and falling markets. Bull and bear markets are important to pay attention to as they can determine currency market trends. By being aware of market trends, can help you to make the best decisions of how to manage risk and gain a better understanding of when it is best to enter and exit your trades.

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Money Management in Forex

Money Management in forex is one of the important factor for consistent profit. Due to its volatility, the Forex market is inherently risky. Money management in Forex is therefore a non-negotiable success factor for both beginners and experienced traders alike.

Successful traders in the long run about the single most important factor in trading, and the majority of them will tell it’s a strict way of managing your money and risk. Even the best strategy in the world won’t be of much help if you don’t take care about your risk per trade, reward-to-risk ratios, don’t use stop-loss orders or trade too aggressively.

RISK PER TRADE

Risk per trade is the amount of your trading account that you’re ready to risk on a single trade.
It’s a key aspect of prudent money management that prevents you from blowing your account. Many money management techniques state that the upper limit of your risk per trade should be 2% of your trading account, or even less if you’re a beginner in the markets.

NEVER GO WITHOUT SL

A stop-loss order is the only guarantee that you won’t lose a substantial amount of money on a single trade. Although certain market conditions can lead to your stop-loss order not being executed at the set price, most of the time they work just well to prevent losing your entire account on a few trades.

REWARD TO RISK RATIO

Placing inappropriate take-profit levels can be as damaging to your trading results as placing inappropriate stop levels, as you won’t be able to maximize the profit potential of your trade setup.

Your take-profit level also determines the reward-to-risk ratio of your trade, which simply represents the amount of your risk relative to the potential profit of the trade. While R/R ratios of 1:1 mean that you’re risking the same amount as your potential gain, trades with R/R ratios of 2:1 or 3:1 have double or triple the amount of potential gain relative to the risk.

BETTER LEVERAGE

Leverage offers the opportunity to magnify profits made from the risk capital you have available, but it also increases the potential for risk. It’s a useful tool, but it is very important to understand the size of your overall exposure. Your broker may give you some leverage on your account to enable you to trade for bigger profits. However, you need to be careful when using this facility.

CONTROL YOUR MINDSET

If you do your analysis right, have confidence in your entry and exit levels and let the market determine if you were right or wrong.

Having a strict and written trading plan that contains not only your trading strategy, but also the way you manage money and risk, can help you to avoid emotional trading.

AVOID AGGRESSIVE TRADING

Trading too aggressively is perhaps the biggest mistake new traders make. If a small sequence of losses would be enough to eradicate most of your risk capital, it suggests that each trade has too much risk. A good way to aim for the correct level of risk is to adjust your position size to reflect the volatility of the pair you are trading. But remember that a more volatile currency demands a smaller position compared to a less volatile pair.

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Comex Insights 08-Jan-2019

Crude Oil:

• Oil prices were stable supported by hopes that talks in Beijing between U.S. and Chinese officials might defuse trade disputes between the world’s biggest economies

• OPEC-led supply cuts also tightened markets.

• There is also concern that a worldwide economic slowdown will dent fuel consumption.

• Looking at oil supplies, 2019 crude prices have been supported by supply cuts from a group of producers around the Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) as well as non-OPEC member Russia.

• Brent crude futures were at $57.42/barrel rose 0.2% from their last close.

• WTI crude oil futures were at $48.56/barrel rose 0.1%

Gold:

• Gold prices slid on Tuesday in Asia, as the U.S. dollar rebounded after falling for four straight sessions amid expectations that the U.S. Federal Reserve may shift its position and slow down future increases in interest rates in 2019.

• Gold Futures for February delivery declined 0.5% to 1,283.50

• Prices of the yellow metal tend to rise when rate hike expectations ease because lower rates reduce the opportunity cost of holding non-yielding bullion.

Palladium and Platinum:

• Palladium touches all-time high at $1,313.24/oz

  • Palladium was trading at a premium to gold, having touched a record high of $1,313.24 earlier in the session.

  • The metal, used mainly in emissions-reducing auto-catalysts for vehicles, gained 0.5 percent to $1,306.55.

• Platinum touches over 1-month high at $831.10/oz

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How Volatility Affects Forex Market?

What does volatility mean in forex?

Volatility (in Forex trading) refers to the amount of uncertainty or risk involved with the size of changes in a currency exchange rate. A higher volatility means that an exchange rate can potentially be spread out over a larger range of values. High volatility means that the price of the currency can change dramatically over a short time period in either direction. On the other hand, a lowervolatility would mean that an exchange rate does not fluctuate dramatically, but changes in value at a steady pace over a period of time.

The market’s estimate of how much a currency pair will fluctuate over a certain period in the future is known as implied volatility. For online investors, a volatile market means both potential risks and an abundance of opportunities. Many traders follow market news and economic calendars in an attempt to recognize potential volatility, benefit from it and stay ahead of the market. Volatility is a useful concept for forex traders that can give them a sense of the risk involved in trading a particular currency pair.

The term “Volatility” most frequently refers to the standard deviation of the change in value of a financial instrument over a specific time period. It is often used to quantify (describe in numbers) the risk of the currency pair over that time period.

Volatility (in forex trading) refers to the amount of uncertainty or risk involved with the size of changes in a currency exchange rate. A higher volatility means that an exchange rate can potentially be spread out over a larger range of values. High volatility means that the price of the currency can change dramatically over a short time period in either direction. On the other hand, a lower volatility would mean that an exchange rate does not fluctuate dramatically, but changes in value at a steady pace over a period of time. Commonly, the higher the volatility, the riskier the trading of the currency pair is.

Forex traders traditionally chose currency pairs for their investments on the ground of classical risk/return analysis. Moreover, both return and risk are assessed in each separate moment or, in the best case, for certain discrete time series. In reality, actual price quotations change constantly at a different pace: sometimes quickly, sometimes slowly. That is why among all other market characteristics a lot of attention should be paid to volatility as a quantitative measure of past, current and future price range of a currency pair.

The most volatile currency pairs are GBP/JPY, EUR/NZD and GBP/AUD.
The least volatile currency pairs are EUR/GBP, NZD/USD and EUR/CHF.

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Forex Insights-20-Sept-2018

EUR/USD:

Headlines: Euro dwells in the tight range in lack of fundamental impulses

• Euro is trading on the upside while remaining trapped within the tight range at around key level as lack of fundamental data see German Bundesbank President Weidmann speaking as a major headline of Thursday.

• EUR/USD appears consolidated in the near term, while further upside is poised to face formidable resistance above 1.1700 the figure for the time being.

GBP/USD:

Headlines:Sterling moves higher after UK retail sales rise above expectations

• Sterling is trading on the upside ahead of the UK retail sales report and the unofficial European summit on Brexit in Salzburg.

• The Uk retail sales rose above expectations on both total and core retail sales basis in August pushing Sterling above key level.

• Sterling rose to a fresh multi-week high after UK inflation rose above expectations in August, but the news of the UK Prime Minister set to reject EU Irish border proposal saw Sterling retreating lower on Wednesday.

• The correction out from the 2018 low has accelerated, with the market pushing through critical shorter term resistance at 1.3000, while trying to set up a higher platform around 1.2800 along the way.

USD/JPY:

Headlines: USD/JPY on the defensive, but holds above 112.00 handle

• The USD/JPY pair traded with a mild negative bias for the second consecutive session, albeit has still managed to hold above the 112.00 handle.

• Rallies continue to be very well capped, with the medium-term outlook still favouring lower tops and lower lows. Look for a daily close back below 109.75 to strengthen the bearish outlook, opening the door for the start to a move back down towards 108.00 which guards against the 104.60 area 2018 low.

CRUDE OIL:

Headlines: WTI consolidates around $ 71, focus shifts to OPEC + meeting

• WTI (oil futures on NYMEX) has entered into a phase of consolidation near two-week tops of $ 71.34, as the bulls await fresh impetus for the next push higher.

• Iran’s Oil Minister Zanganeh was on the wires last minutes, speaking about the output policy ahead of the OPEC+ meeting in Algiers this weekend.

• Oil at $80 per barrel is a suitable price.

GOLD:

Headlines: Gold edges lower, but holds above $1200 mark on softer USD

• After an initial uptick to fresh weekly tops, gold prices turned lower and eroded a part of previous session’s goodish up-move.

• Spot prices inched higher on Wednesday and jumped back above the key $1200 psychological mark, shrugging off a strong rally in the US Treasury bond yields.

• Fails to capitalize on overnight up-move, despite retracing US bond yields.
  • Risk-on mood/Fed hike prospects seemed to collaborated towards capping.
  • The prevalent USD selling bias helped limit any immediate sharp downside.

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