After deciding to become a stock trader, you will most likely keep hearing these two terms, “bull market” and “bear market”. What do these terms mean and what does stock trading have to do with bulls and bears?

A bull market is when most people feel positive about the stock market and want to buy stocks. It is during long bull markets that the stock market index keeps ascending.

A bear market is the opposite. It happens when the stock market keeps collapsing no matter what. It is during these times investors could not sleep and continually wonder whether they should be selling their stocks.

During a bull market, you can probably make money from almost any stock. Everyone will want to give you their stock pick and chances are the stock will rise. All the analyst on newspaper will be giving out their stock picks and you can most likely make money on any of them. Even your dentist may want to give you a stock tip.

If you start investing in stocks during a bull market you may get over confident. You may make money right away and think it is easy. This is something to be cautious about if you are just starting to invest in stocks. It is not easy and things can turn around in a day.

During a bull market, everyone wants to sell. The stocks you own may go down continuously. You will be confused and want to sell and wonder whether you should accept the loss. Remember 9/11 when the stock market went down huge and kept collapsing for months after? Do you cut loss or do you hope for long term? Will the stock market ever turn around? Do you buy more at a lower price? These are just a few of the questions that you will encounter in a bear market. It is easy to invest in good times when everything is going up. The bear market times, on the other hand, are what separates the experts from the amateurs. It is what you do during the down times that can make or break your investing year.

Most of the time the market is somewhere in between a bull and bear market. Usually the better stocks rise over time and the stocks of non-performing companies go down. It is best to always try to pick stocks of companies that are doing well or will do well. Of course this skill is not owned by everyone. The stock market can be a confusing and scary place for beginners that takes a lot of time and experience to get used to.