What is a Bear Market?

The thought of a bear market conjures images of men on the trading floor, sweating profusely and scratching their heads as the price of a stock tumbles through the floor.

In Forex, this means that a currency is losing value against another currency. Think of it as the bear which stomps its paw DOWNWARD to trap its prey.

Except… in the Forex market, it is actually an opportunity! You can make money by entering the market from a selling position, and *make money* as that currency loses value.

In the Forex market, you make money by predicting whether the currency is going up or down – either way, if you’re correct, your trade is successful.

I’ll leave you with some wise quotes from Edwin LeFevre’s Reminiscences of a Stock Operator:

“In a bear-market all stocks go down and in a bull market they go up. I don't mean of course that in a bear-market caused by a war, ammunition shares do not go up. I speak in a general sense. But the average man doesn't wish to be told that it is a bull or a bear-market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn't even wish to have to think. It is too much bother to have to count the money that he picks up from the ground.”

…and…

“But not even a world war can keep the stock market from being a bull market when conditions are bullish, or a bear-market when conditions are bearish. And all a man needs to know to make money is to appraise conditions.”

…and my favorite quote of all…

“The bear side doesn't appeal to me any more than the bull side, or vice versa. My one steadfast prejudice is against being wrong.” (I like this quote in particular. It shows the importance of always trading with the overall trend of a market.)

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