Bearish – understanding, types and tips for dealing with them

In the nature of the stock game, you don’t just need to know the methods, risks, and benefits. But also different terms in stocks and moments when investing in stocks that can affect the highs and lows of a stock.

One of the moments and stock conditions that stock players, especially traders, need to know is bearish. Which is one of the moments/conditions in the stock market that can be used to create investment strategies, increase profits, or can actually be a risk to be avoided in order to avoid losses many times over.

So what’s bearish about stocks?

Definition of bearish

Bearish is a stock market condition that is experiencing a downtrend or decline. Bearish comes from the word Bear, which means bear. The fall in the stock market has been compared to a bear attacking its enemy by scratching its claws downward.

The term bearish can also be used to refer to global market conditions, the corporate sector, the price of certain financial assets, and is commonly used by traders to describe sentiment that makes an asset bearish even though its price has not declined.

A sign of a bearish occurrence is the drop in the overall stock price index. If this condition persists, investors will consider the option of selling shares to avoid losses. In a unique way, what was originally just a prediction can become a reality.

When the market is down, sentiment towards the stock market also becomes negative. Investors will switch from equities to fixed income until there is a positive trend. Investors will withhold money from the market. As a result, prices fell significantly. The drain also increased.

There are many reasons that lead to declining conditions, although the main one is the weakening of a country’s economic conditions or even the slow growth of the global economy. This is usually indicated by the existence of a trade deficit, rising unemployment, negative curves of the company’s profit rate, and other factors.

Bearish guys in the stock market

Bearish stocks have several types, both of which have several differences and characteristics. Knowing the types of bears in stock investing will be very helpful in avoiding stock investing risks.

The following types of bear markets in the stock market:

1. Bearish engulfing

Bearish engulfing is the opposite of bullish engulfing. This pattern indicates bearish potential, when this pattern appears it is characterized by a longer bearish candle compared to the previous bullish candle.

The bearish engulfing candlestick is one of the most obvious price action signals in the forex market. Many traders will use these forex candlestick patterns to identify price reversals and continuations to support their trading strategies.

This pattern will trigger a trend reversal that will take place as more sellers will enter the market and cause the price to drop. This bearish engulfing pattern involves two candlesticks, with the second bearish candlestick fully engulfing the “body” of the previous green candlestick.

2. Bearish divergence

A bearish divergence is a position where the price is making a higher top on the chart while the indicator is making a lower top or top. After bearish divergence occurs, crypto assets typically make rapid bearish moves.

This pattern gives an indication of a very rapid change from rising to falling. When such a repeating pattern occurs, the bearish move accelerates.

However, there are times when a bearish trend occurs for a longer period of time. This trend is called hidden bearish divergence. This pattern will show a decline for some time. Hidden bearish divergence is a condition where the price chart is in a lower high position while the indicator is in a higher high position.

3. Bearish reversal

A bearish reversal is a reversal in the direction of stock prices that were initially up but then trended down. The pattern is the opposite of the bullish reversal described above. A bearish reversal means that the stock price initially went up, but the stock has an opportunity to fall again.

A bearish reversal is a type of chart pattern that shows the potential for stock prices to fall. Not a normal correction but a fairly deep pullback that occurs in the distribution phase or Stage 3 of the stock cycle. Therefore, the bearish reversal is a chart pattern to watch out for.

4. Bearish Harami

A bearish harami is a two-candlestick pattern that indicates a reversal to the downside. This candlestick pattern should not be traded in isolation but should be considered along with other factors in order to achieve a bearish Harami confirmation.

The bearish Harami pattern is a reversal pattern that appears at the top of an uptrend. It consists of a bullish candle with a large body followed by a bearish candle with a small body trapped in the body of the previous candle.

As a sign of changing momentum, the bearish candle had a small downward gap that opened near the mid-range of the previous candle.

Bullish and bearish difference

Besides bearish, there is another term that is often used to describe stock market conditions and that is bullish. The term bullish is the opposite of bearish, these two terms being things that are mentioned together when discussing stock market patterns or conditions.

In the world of precious metals stocks, there is an increasing trend that is occurring due to the market euphoria. The term Bullish is also often thrown at traders when the condition of their financial assets has not shown any upward movement.

Just like Bearish, Bullish also has multiple types of Bullish either Bullish Engulfing, Bullish Divergence, Bullish Reversal and Bullish Harami. The four types of bullishness mean the opposite state or opposite of each type of bearish with the same surname.

So if it can be concluded that the difference between bullish and bearish overall is that bullish is a term to describe stock market conditions that are going up while bearish is a term to describe a fall in the stock market.

Tips on dealing with bears when investing in stocks

While bearish conditions are a loss in the stock world, that doesn’t mean they can’t be addressed. Don’t panic and stay calm, here are some tips for dealing with bearish conditions when investing in stocks:

1. Avoid transactions when emotions are ebb and flow

Who isn’t angry and in a bad mood when the stock market is weak. But going back to transactions when your mood and thoughts are hectic will only cause you to take the wrong steps and harm yourself even more.

2. Study of the issuer’s annual accounts

To avoid impulsive action when bearish conditions materialize, it’s a good idea to try to distract yourself by looking at the latest financial reports released by issuers. This will make you calmer and even make a new investment plan at the same time.

3. Fund Accumulation with Dollar Cost Averaging (DCA)

In a company, a declining or negative market is certainly a natural thing like a cycle in a company. If you are a long-term investor, you should try using Dollar Cost Averaging or DCA as a strategy to deal with a bear market. This method keeps your money stable.

4. Play dead

This strategy requires you to prioritize the money market in your portfolio by buying certificates of deposit and various other highly liquid instruments with shorter maturities.

Get to know investment strategies for more money

Stock investing isn’t just about buying or selling stocks. Just like business in general. Investing in shares also requires the right strategy so that the coveted profit does not turn into a loss. Because of this, it’s important to learn various stock jargon in order to develop a better investment plan.

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