Success Trading: More Basic Terminology for New Traders

By: Chuck Cox

Bull Market – This describes a market where the overall market is rising. Typically, this is measured by the NASDAQ and the Dow Indexes. Experts recommend that you only buy during Bull Markets because the odds are much more in your favor – this is true, but keep in mind there are plenty of stocks that plummet during Bull Markets too.

Bear Market – This describes a market where the overall market is dropping. As with Bull Markets, again we measured this by the NASDAQ and the Dow Indexes.

Experts recommend that you only sell short during Bear Markets because the odds are much more in your favor – this is true, but keep in mind there are plenty of stocks that rise during Bear Markets too.

The important thing about using indexes to help your trading was mentioned earlier. During Bull Markets, you can expect 65% or more of all stocks to be rising – so if you look to buy during Bull Markets, the odds are very much in your favor. Of course, the opposite is true with the Bear Markets. Another characteristic of these two markets is that Bull Markets generally last 2-3 years, while Bear Markets last only 1-1 ? years. So it’s a very good idea for new traders to get in the habit following the indexes early in their learning. This will give you a tremendous advantage.

Trading
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