"Bull market" and "bear market" are everywhere in financial news. Behind the jargon is a simple idea — and knowing which regime you're in changes how you should trade.
The definitions
- Bull market — a sustained period of rising prices and optimism. The rough rule of thumb is a rise of 20% or more from recent lows.
- Bear market — a sustained decline, often defined as a drop of 20% or more from recent highs, usually with fear and weak sentiment.
Why bulls and bears? A bull attacks by thrusting its horns up; a bear swipes its paws down.
Why the regime matters
Strategies that thrive in one regime can bleed in the other:
- In a bull market, buying pullbacks ("buy the dip") tends to work because the trend keeps lifting price.
- In a bear market, those same dips often keep falling, and rallies fade. Short setups and patience pay better.
Trading a bull-market playbook in a bear market is a classic, expensive mistake.
How to read the regime
- Use the longer-term trend — price relative to the 200-period moving average is a common gauge.
- Watch market structure: higher highs and higher lows (bullish) vs lower highs and lower lows (bearish).
- Don't try to call the exact top or bottom. Trade the regime you can see, not the one you predict.
The honest caveat
Markets also spend long stretches going sideways — neither bull nor bear. Forcing a directional bias onto a range is another way to lose. When in doubt, trade smaller and demand cleaner setups.
Don't fight the regime. Identify it, then pick the playbook that fits it.
Education only — not financial advice.