Posts Tagged ‘Uruguay’

The Importance of Market Sentiment: Bear and Bull Markets

April 27, 2015

Pablo Soria de Lachica leads the development of innovative online trading tools as director of business development for Bforex, a currency trading firm with more than a dozen offices spanning the globe, including branches in Uruguay, Brazil, and Mexico. The recipient of several company awards including Best Worker, Best Moderator, and Best Director in the Bforex Latin America division, Pablo Soria de Lachica facilitates the delivery of convenient trade platforms that aid both trade execution and market analysis for both experienced and novice traders.

An understanding of investor sentiment can aid foreign exchange trading activities, allowing traders to detect, or even predict, global investment trends. Traders across various investment sectors often characterize markets as having either a “bull” or “bear” sentiment. Marked by optimism and confidence, a bull sentiment characterizes a market that is experiencing significant momentum and investor optimism. Oftentimes, a bull sentiment occurs due to existing positive trends in a given market. When investors expect the value of currencies or assets to increase or continue to increase, they often react by rushing into a particular investment, generating upward momentum.

In contrast, traders refer to a market as having a bear sentiment during periods of investor pessimism, which is often self-sustaining. As investors predict losses caused by a prevailing bear sentiment, they further bolster negative investor sentiment. Unlike a correction, which is a downward market trend lasting two months or less, a bear market is a long-term trend that poses significantly more risks.