How To Define Who Is A Bear In Trading

A trader who believes the price of the market, in general, will decrease in value is known as a bear.

How to spot a Bear in Trading？

Based on a negative outlook on price action and associated short positions to profit from an expected sell-off, we can identify a bear. A bear in the forex market trading is more frequent than in the stock market. Therefore, sentiment and positions change frequently, offering a broader balance between bears and bulls.

What is the Essence of a Bear？

A bearish sentiment applies to all asset classes and counters bullish sentiment. While bulls attempt to buy low and sell high, bears seek to sell high and buy low. Short selling is the primary approach, where a bear borrows an asset from a broker, then buys it in the open market once the price falls and earns the difference minus associated costs. Bears in equity markets are less frequent, as the long-term trend is bullish. Therefore, long-term bears, or perma-bears, constantly lose money. Smart money applies a bearish bias to portfolios for short-to-medium-term market conditions, as a bear market has a shorter duration than a bull market.

Conclusion

Since markets rally and correct, bears have a profitable approach to navigating corrections. Adopting either a bull or a bear attitude is counterproductive, as traders can miss significant opportunities. Smart money operates long/short portfolios. They ensure diversification and create profitable opportunities irrelevant to a bull or bear market.