Bear Market

A bear market is a term used to describe a financial market where prices are falling over a period of time. It usually refers to a drop of 20% or more from recent highs in the price of stocks, currencies, commodities, or other financial assets. A bear market reflects a negative sentiment among investors and traders, often caused by economic problems, political uncertainty, or a major financial crisis. During a bear market, people generally expect prices to keep falling, which can lead to less buying and more selling.

Bear markets can last for weeks, months, or even years, depending on the cause and the overall economic situation. They are often seen as risky periods for investors because the value of their investments may continue to decrease. However, some traders, especially short sellers, try to profit from falling prices during a bear market. Understanding what a bear market is can help traders prepare for changing market conditions and adjust their strategies to protect their capital or find new opportunities.

Browse through other terms in our Trader’s Dictionary.