The term “bearish” means a trader is pessimistic and that the price will go lower from where it currently is. If you are bearish on a market, you believe that the market is going to fall.
A “bearish market” is when the price is in a downtrend, marked by lower highs and lower lows.
The term is based on a bear swiping downwards with its paw.
The origin of the term is unclear, but legend says it’s from a painting by William Holbrook Beard called “The Bulls and Bears in the Market,” which is believed to depict the U.S. stock market crash of 1873.
Being bearish means you have a negative sentiment and are pessimistic about the future direction of price.
If you are “a bear” or “bearish“, it means that you have a negative sentiment and are pessimistic about future price direction.
For example, Jane is “bearish” on the euro, which means she thinks EUR will go down in price.
Bullish vs. Bearish
Being “bullish” is the opposite of being bullish.
While being bearish means you are pessimistic that prices will go higher from where they currently are, being bullish is the opposite: you think prices will trade higher from where they currently are.
Bearish traders will look to take short positions. Bullish traders are looking to take long positions where they will profit if the market goes up from its current price.
Vincent Nyagaka is a Professional Trader, Analyst & Author. He has been actively engaged in market analysis for the past 7 years. He has a monthly readership of 100,000+ traders and has taught over 1,000 students since 2014. Vincent is also an experienced instructor and public speaker. Check out Vincent’s Professional Trading Course here.