Trading language can be difficult to understand for most stock market beginners. If you have just started trading, then you must have heard terms like bull, bear, long, short etc. These terms are commonly used by traders and research analysts while describing the mood or trend of the market.
To become a successful trader, you will need to familiarise yourself with these stock market terms.
Today, we will help you understand what is a bull market, what is a bear market, & what are long positions and short positions in the stock markets.
1. What is the Meaning of Bull Market?
A bull market is when the share prices are continuously rising. A bull market means that investors are confident of the overall economy. A bull market is also a result of good corporate numbers, economic development, low unemployment, less inflation etc.2. What is the Meaning of Bullish in the Stock Market?
If you believe that the price of your shares is going to increase, then you are bullish on that share. [Suggested Reading: Bull Spread- Bull call spread strategy]3. What is the Meaning of Bear Market?
A bear market is the opposite of a bull market. In a bear market, you expect the share prices to continuously fall. Usually, in a bear market there are more sellers than buyers. Generally, poor company performance, a weak economy, high unemployment, high inflation etc are the reasons for a bear market. A popular example of a bear market is the March 2020 period when the stock market fell due to Covid-19.4. What is the Meaning of Bearish in the Stock Market?
If you believe that the price of your shares is going to fall, then you are bearish on that share. [Suggested Reading: Bear put spread strategy] Key takeaways on Bulls & Bears in the stock Market:- The general direction that the market is moving in is called a trend.
- If the markets are falling, the trend is bearish.
- If the markets are rising, the trend is bullish.
- If you expect the markets to fall, you are bearish on the stock market
- If you expect the markets to rise, you are bullish on the stock market.
5. What is the Meaning of a Long Position?
A long position means when you buy a share expecting the price to increase. In simple terms:- Long Position = Buy
6. What is the Meaning of a Short Position?
A short position means when you sell a share expecting the share price to fall further. In simple terms:- Short Position = Sell
- Decrease in share price = Profit
- Increase in share price = Loss
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- When you buy a share, you are taking a ‘Long position’.
- When you sell a share, you are taking a ‘Short position’.
- In long positions, the potential loss is limited to 100% of the position.
- In short-selling, you may lose more than 100% if the share price doubles.
Let us understand the meaning of bull, bear, bullish, bearish, long, short with this simple example:
Let’s say, Reliance Industries is trading at Rs 1,000. Bull Market - Bullish Trend- If you believe that the share price of Reliance Industries will increase, then you are bullish on Reliance.
- If you buy 100 shares of Reliance Industries, you have taken a long position in Reliance.
- If the share price of Reliance Industries increases steadily, then the trend is bullish.
- If you believe that the share price of Reliance Industries will fall, then you are bearish on Reliance.
- If you sell 100 shares of Reliance Industries, you have taken a short position in Reliance.
- If the share price of Reliance Industries decreases steadily, then the trend is bearish.
- The bulls will start making money as and when the share price of Reliance Industries rises above Rs 1,000. For example, if the share price becomes Rs 1,100 then you can sell the shares, making Rs 10,000 profit.
- The bears will start making money as and when the share price of Reliance Industries falls below Rs 1,000. For example, if the share price becomes Rs 900 then you can buy back 100 shares, making a profit of Rs 10,000.
Conclusion:
Apart from understanding the meaning of bulls, bears, short-selling etc, to become a successful trader you should also trade through an honest, cost-effective broker. Samco has been awarded as the best equity stock broker in India by CNBC Awaaz and Samco charges only Rs 20 per executed order. Samco offers the best share trading platform in India with unique benefits like “Buy Today Pay in Two Days”, Option Plus etc. When you trade with Samco, you can save upto 80% brokerage! So, become a smart and successful trader by opening a Samco Demat and Trading account and get a unique 3-in-1 Demat, Trading and Mutual Fund Investing account.Happy Trading
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