Because security prices rise and fall essentially continuously during trading, the term Bull Market is generally reserved for extended periods of time when a large portion of security prices are rising. Bull markets tend to last for months or even years.
Bull Markets are characterized by optimism, investor confidence and the expectation that strong results should continue for an extended period. It is difficult to consistently predict when market trends might change.
Part of the difficulty is that psychological effects and speculation can sometimes play an important role in markets. There is no specific, universal measure to identify a bull market. Analysts can usually only recognize this phenomenon once it has occurred.
One notable bull market in recent history was the period between 2003 and 2007. During this period, the S&P 500 rose significantly after an earlier decline; as the financial crisis of 2008 took effect, significant declines again occurred after the market rallied.
The opposite of a Bull Market is a Bear Market, which is characterized by falling prices and is usually surrounded by pessimism. The common belief about the origin of these terms suggests that the use of the terms Bull and Bear to describe markets comes from the way animals attack their opponents. A bull pushes its horns into the air, while a bear slides its paws down.
These actions are metaphors for the movement of a market. If the trend is up, it's a Bull Market. If the trend is down, it's a Bear Market. Investors who want to take advantage of a Bull Market should buy early to take advantage of rising prices and sell when they peak.
Although it is difficult to determine when the bottom and peak will occur, it is possible to make a profit easily with a good trading algorithm.
