Bear market definition
A bear market is any market that experiences a fall of around 20% or more from its recent high. Most commonly applied to stock markets, the term can also be used for anything that is traded, including currencies and commodities. A bear market is the opposite of a bull market.
The term ‘bearish’ is used to describe any market experiencing prolonged declining prices amid general pessimism and negative sentiment. Often accompanied by an economic downturn, such as a recession, bear markets can last from a few weeks to several years. Bearish conditions often discourage investors from buying into markets although some will try to ‘buy the dip’ when they believe the market has reached the bottom. ‘Bears’ are traders who believe that a market is headed on a downward trajectory. They may look to benefit from depressed markets by selling stock or opening short positions through CFDs or other derivative trading. These traders are often described as bearish.