What is a Bull Market? Definition, & Strategic Tips

Bull market

A condition of a financial market in which prices of different stock securities are rising or are predicted to rise in the future is called a bullish market or bull market. This term is mainly used in the stock market but can include other commodities such as bonds, real estate, currencies, commodities, etc. 

One of the criteria to know whether the market is a bullish market is, that a bull market sees a growth of 20% or more in several stock exchanges around the world for at least two months, the two parameters considered while determining a bull market are trade volume and purchase volume.

A bull market is a boon for shareholders, traders, and investors because it increases the value of their money manifold. The outcomes of the financial market such as consumer confidence, cash flow in the market, and overall better performance of the financial institutions decide the mood of companies, traders, and investors.

What is a Bull Market Definition Strategic Tips

How to know whether the market is bullish or not?

In a stock market, the prices of stocks are varying and it is a rather difficult task to identify whether a market is bullish or not. On a day-to-day basis, intraday trading determines hugely whether it is going to be a bullish day in the financial market or not. A high rise in intraday trade means a bullish day in the financial market.

Some indicators of a bull market

Market rally

When there is sufficient funding available for investment in the stock market and prices of stocks rise by the base price of the stock, it is said to be bullish. Government spending on various developmental programs and various tax cuts to facilitate business increases investors’ confidence in the financial market and results in the market rally.

Volatility index

When there is a rise in the volatility index, it is often considered a perfect indication of a bullish market. The volatility of the market is more than normal during a bullish trend.

Lower bond yield

The investment in zero-risk bonds often gives a return as a low-interest rate such as money in banks as savings. When this happens, the investors pull out their money from zero risk and put it into higher-risk securities to gain much more than before resulting in more funds in the stock market and helping companies to accumulate funds and invest them for a bigger profit.

Causes of a bull market

A country having good policies in place mainly regarding business and development purposes to ensure adequate goods availability and services and better market conditions help in strengthening the economy.

Large-cap companies play an important role in the financial market and are major indicators of a bull or bear market. 

The volatility in the market affects the low-cap and mid-cap companies more than large-cap companies. A country doing good on all the parameters of development such as reducing poverty, unemployment, growth in standard of living, etc.

This results in a better economic condition for the country and hence the financial market of that country will be seen as bullish.

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