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Recognising Bullish & Bearish Market Trends

The definition of bullish and bearish markets is simple. Bullish markets are trending upward. Bearish markets are trending downwards. But why do you get them?.

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What differentiates a bearish from a bullish trend?

When you see the price of assets steadily rise or decline, you know you’ve got yourself a bullish or bearish market.

Why you get bullish or bearing markets is a different story, as is how to make the most out of both. But it’s important to understand the terms so when you hear or see either trend, you know which way to bet on. Now simply because the general trend is going upwards or downwards, doesn’t mean there won’t be fluctuating trends on short expiry trades – so don’t think you place a ‘put option’ or ‘call option’ all the time and win.

An example shows a simplified Bearish market trend.
An example shows a simplified Bullish market trend.

Bullish and bearish trading strategies become a more appealing option when you are seeing increasingly steady price increases or decreases, making it easier to profit over longer trades. However if you are seeing extended periods of incline or decline, it might mean that the market is about to shift. A bullish markets tends to follow a bearish market and vice versa.

So how do you profit if in short term there might be fluctuation, but in long term it might suddenly turn?

Analyse and Research

Getting to know the financial markets or assets you are trading binary options in is the fundamental beginning to getting your trading portfolio off to a good start and a profitable future. Prices rise and fall continually over the course of days, weeks, and years, but there are some influences and factors that can dramatically change and shape the markets.

The biggest factors that influence the markets are major international news releases. For example, a major company releasing their quarterly losses, mergers and acquisitions, or new products. The outcome of economic meetings between countries or a natural disaster. Hurricane Sandy shut down most of New York and with it Wall Street – a bear market was clearly seen that day. Google announcing it was launching the Android OS system led to a massive spike, and bullish trend, in that companies stocks.

Now we are not saying you should look forward to disasters, or become addicted to every single new story thinking it has a larger meaning, but generally watching and reading the news globally and seeing how it in turn affects the financial markets, will teach you to spot what will make a difference in the assets you trade in.

There is no shortcut, but there are plenty of very good financial news agencies who do the hard work for you and pick up on the stories that will most likely affect the market, whether pushing it up or down. With that in mind most of the best binary options brokers give you access to up to date financial news, prices and statistics to help you analyse all the data in real time.

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