2.4 Bears, Bulls and Sentiment - Oh my!

In trading lingo, there are two animals you’ll hear talked about very often; the Bear and the Bull. They represent Sentiment – the way the market watchers feel or think things will play out. The true origin of these terms is not known but using a little bit of imagination, they do make sense.

The bull here represents high-level confidence that there will be an increase in a trading price. So, if you’re feeling ‘bullish’, you expect that values will rise.

On the other side, we have the bear. Bears are more defensive in their nature. They prepare for hard times. A ‘bearish’ trader expects the trading value to fall and will plan their sell trades accordingly.

Other animals are also mentioned in trader-talk, such as doves and hawks. Each representing a more nuanced sense of expectation from the markets. For now, we’ll just stick to the two opposing attitudes.

Sentiment, regardless of which animal we choose to represent it, is hugely important in understanding how markets are expected to perform in the future. Though much of this data used to be taken from surveys and polls, modern web-based tools allow for real-time data analysis. This can be hugely powerful in terms of traders having an immediate feel of the sentiment driving the values in the market.

Finally, since Cryptocurrencies are relatively new products in the trading markets, there just isn’t the historical data to hand found in traditional, long-term statistical analysis. So for Crypto, social sentiment indicators (SSIs) are even more essential. We’ll be looking at market indicators and getting hands-on with trading in our next learning materials section.

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